Benefits of choosing Colombia as an investment destination
The benefits of choosing Colombia as an investment destination
Free Trade Zones
Free Trade Zones are geographically delimited areas of the country in which the industrial or commercial activities of goods and services are carried out under a specific legal framework. This framework, known as the Free Trade Zone Regime, includes a series of regulations on tax, customs and foreign trade matters.
The main tax benefits available to companies that are part of Free Trade Zones include: 20% reduction in income tax, exemption from VAT and tariffs on goods imported from abroad, access to the benefits of international trade agreements, the chance to carry out partial processing outside of the Free Trade Zone for up to nine months and exemption from VAT on the sale of goods to external markets.
Incentives for investing in labor
Companies employing workers with a disability proven to reduce their working capacity by a minimum of 25% and that are obliged to declare their income for tax purposes, are entitled to make a tax deduction of 200% of the value of these workers' salaries and social benefits.
If companies hire personnel who have been displaced or are undergoing reintegration, as well as women over the age of forty who have been unemployed at least one year and workers who earn less than 1.5 times the minimum wage, the parafiscal contributions and other payroll expenses related to these employees will be tax deductible too.
Colombia also offers tax discounts to investors who hire people between the ages of 18 and 28 who have no previous formal work experience related to their area of study. In this case, companies receive a subsidy for every new job generated. These companies are also exempt from making contributions to Family Compensation Funds for these workers during their first year of employment.
R&D + I investment incentives
Companies that invest in research projects, technological development or innovation will be entitled a 25% deduction of the value invested, from their income tax returns. This investment may be made via researchers, research groups or centers, centers of innovation and productivity, or technology-based incubators, among others.
Similarly, resources that a company receives that are destined for the development of scientific, technological or innovation projects, do not constitute income or fortuitous profit.
Companies that undertake all their economic activity in the areas most affected by Colombia's armed conflict (ZOMAC) and comply with the National Government's standards and requirements, enjoy discounts on their income tax payments.
In order to access these tax deductions, companies must create direct jobs in ZOMAC through labor contracts that extend until December 31, 2027.
Importing capital goods
Companies that import heavy machinery for their basic industry are exempt from making VAT payments on such purchases. They are also entitled to pay their sales taxes in three installments over a period of two years and are exempt from paying import tariffs, depending on the type of goods they intend to import.
In order to promote the development and use of unconventional energy sources, renewable ones in particular, companies that undertake efficient energy management will be entitled to a 50% income tax deduction on the value of their investments.
Similarly, the machinery and some energy efficiency project teams are also VAT exempt. In order for this to apply, it is necessary that the machinery and teams will be used in projects related to the transport, industry, tertiary or residential sectors.
Tax incentives such as these offer investors the chance to take advantage of opportunities in sectors including renewable energy and infrastructure. The investment of foreign capital also helps boost the local economy, and improve the competitiveness of Colombian companies.