These Agreements allow your company to insure the regulation for your project.

The Legal Stability Agreements are tools that allow investors to “stabilize” the regulations they find determining for their investment.  Thus, the result is that if the regulation is changed in a detrimental way for the investor, the previous regulation that was stabilized will be applied during the term of the agreement. The agreement may be signed according to the project from 3 to 20 years. In order to benefit from these agreements the foreign investors must comply with the following requirements:

Requirements:

  • In order to apply for such an agreement, the investor must make new investments or increase existing ones so that the total investment reaches at least 7500 Minimum Monthly Legal Wages, equivalent to approximately USD$2.14 million.
  • The investor must pay the government a premium equivalent to 1% of the amount of the investment made every year. This means that the investor can pay the premium of 1% of the total investment in the first year or differ it on a year by year basis.

What rules CANNOT BE covered by such legal stability agreements?

  • Rules regarding the social security system.
  • The obligation to report and pay taxes levied by the government under a state of emergency.
  • Indirect taxes (i.e., the VAT or the tax on banking transactions).
  • Prudential regulations of the financial system.
  • The utility rate system.
  • Environmental regulation.
  • Rights, guaranties and duties enshrined in the Constitution in pursuance of ratified international treaties.

How to apply for a Legal Stability Agreement?

Procedure

STEP 1: Submission of an application to the Technical Secretariat of the Legal Stability Committee, which reports to the Competitiveness Director of the Ministry of Trade, Industry and Tourism.

STEP 2: Upon receipt of the application, the Technical Secretariat will verify whether it contains all the required information.

STEP 3: Within three (3) business days following to the admission of the application, the Technical Secretariat will request the technical opinions it may deem necessary to evaluate it, from the National Planning Department, the Ministry of the sector in which the investment will be made, or any other appropriate government agency. The corresponding agencies will have fifteen (15) business days to deliver such opinion to the Technical Secretariat.

STEP 4: Within fifteen (15) business days following the date on which the above opinions are received, the Technical Secretariat will prepare the corresponding technical report with the evaluation, including recommendations for the Legal Stability Committee.

STEP 5: The Committee will then hold a meeting to approve or reject the agreement. The applicant may be invited to such meeting, in order to elaborate on the details of the application.

STEP 6: Within ten (10) business days following the decision approving the execution of a Legal Stability Agreement, the Technical Secretariat will prepare the text of the corresponding agreement, based on the terms approved by the Committee, and will send the agreement to the applicant and to the Ministry of the sector in which the investment is to be made, for the agreement to be signed.

**One Minimum Monthly Legal Wage is equivalent to COP$ 515.000

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