Which Foreign Investment Incentives exist?
*Due to changes in the tax regime (Law 2010, December 27th, 2019) this chapter is being updated*
Colombia has established a series of instruments that provide wide-ranging benefits for investors. These include the free-trade zones regime, incentives for mega-investments, the Vallejo Plan, the orange economy incentives, investments in agribusiness, and renewable energies, among others.
Free-trade zones, for example, are delimited geographic areas where industrial activity involving goods, services, and commercial activity takes place under a special customs regime. These zones can be permanent, special permanent, offshore permanent and transitory, and all of them offer the following benefits:
- A special income tax rate of 20%
- Exemption from sales tax (VAT).
- The possibility of carrying out partial procedures in the national customs territory.
- Benefiting from all the trade agreements signed by Colombia for exports to third countries.
Additionally, Colombia provides incentives to attract foreign capital for mega-investments that are made between January 1 of 2019 and January 1 of 2024, offering the following special regime incentives:
- An income tax and a complementary tax rate of 27%.
- Exemption from the special tax on dividends.
- Exemption from the net worth tax.
- The possibility of depreciating your assets over a minimum period of 2 years, regardless of the lifespan of the asset.
- The possibility of entering into tax stability contracts, through which the Colombian state will guarantee that the aforementioned tax benefits will remain in place for the same period of time.
In addition, the Colombian state offers financial incentives for the creation of jobs for young people between 18 and 28 years old with different levels of education, providing subsidies for companies for the payment of employees’ salaries and social benefits.
Keep in mind
- There is a special system for imports and exports arising from the Vallejo Plan, offering benefits related to total or partial exemption from the customs duties that apply to the importation of raw materials, consumables, capital goods and spare parts.
- International Logistics Distribution Centers (CDLI) are public warehouses, made available by customs authorities and located at seaports or inland ports and international airports, where goods can be taken for storage, preservation and to be prepared for distribution.
- In order to qualify as users of a permanent free-trade zone, companies must meet requirements regarding their real productive fixed assets to determine their commitment in terms of the number of direct jobs and the generation of new investment.
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