Tax incentives for development in the Colombian countryside
FAQs about Decree 849 of 2020:
- What is the tax benefit?
Tax exemption for up to ten years.
- What is the incentive for?
To foster productivity in the agricultural sector.
- Which sectors does the incentive apply to?
The incentive applies to the agricultural, livestock, hunting and associated services, forestry and logging, fishing and aquaculture, food product preparation, and beverage preparation sectors.
- When should I have registered my legal entity?
You must have registered your legal entity after December 28, 2018.
- By when should I start my economic activities?
You must begin your economic activities before December 31, 2022.
- Is there a minimum investment and income amount?
Companies that earn up to 40,000 UVTs (Tax Value Units) must make a minimum investment of 1,500 UVTs (Tax Value Units) ($53.4 million COP):
- How long do I have to reach the minimum investment amount?
Investments must be made within a maximum period of six years from the date of issue of the certificate of compliance from the Ministry of Agriculture and Rural Development, or from the Ministry-delegated department.
- What happens if I fail to reach the minimum investment amount in six years?
If you do not reach the minimum investment amount, the tax benefit will be lost after the sixth year
- What happens if I go beyond the maximum income amount?
A maximum income of 290,000 UVT ($10,326,030,000.00 COP—approximately US $2,859,121.00) is established for which a minimum investment of 80,000 UVT must be made over the first six years. You will not be able to access the tax benefit if you exceed the maximum income amount in the respective tax year.
- How many direct jobs do I need to create?
The minimum amount of direct jobs created is in accordance with the investment amounts as follows:
| Minimum investment amount in UVTs during the first six (6) years | Income in UVTs during the respective tax year | Minimum number of direct employees | ||||
|---|---|---|---|---|---|---|
| From | To | From | ||||
| 1 | 1,500 | 0 | 40,000 | 1 to 10 | ||
| 2 | 25,000 | 40,001 | 80,000 | 11 to 24 | ||
| 3 | 50,000 | 80,001 | 170,000 | 25 to 50 | ||
| 4 | 80,000 | 170,001 | 290,000 | More than 51 | ||
- How can I demonstrate that I have created direct jobs?
Direct employment must be confirmed though a permanent employment contract.
- What is the benefit period?
The benefit period is ten years from the date of the certificate of compliance that must be used by the Ministry of Agriculture and Rural Development. These certificates can only be issued until December 31, 2022.
- How can I access the benefit?
Companies that want to access these benefits must present their agricultural sector productivity-increasing investment projects to the Ministry of Agriculture. They must specify the technical implementation of their projects and justify their financial visibility and economic appropriateness.
- What is the procedure to request a certificate of compliance from the Ministry of Agriculture and Rural Development?
- Investment Project Presentation: Submission can be in hard copy or via the online platform (once activated) by October 14, 2022 at the latest for approval of the investment project.
- Information Request: The Ministry of Agriculture and Rural Development has a period of ten days to request missing information (to rectify or complement project specifications) from the applicant. Once the application meets all the corresponding specifications, the Ministry will have one month to accept, reject, or dismiss the presented project.
- Period to complement project information: The investor will have one month to rectify and gather the missing information requested by the Ministry.
- Acceptance and issuance of the Certificate of Compliance:Once the information has been rectified and gathered, the Ministry will have one month to accept it and issue the certificate of compliance or to issue a certificate of non-compliance due to failure to fulfill the requirements.
- Maximum period for project approval: Before December 31, 2022, to proceed with the tax exemption provided for in paragraph 2 of Article 235-2 of the Tax Statute.
Within the two months following the issuance of the Decree, the Ministry of Agricultural and Rural Development will pass a Resolution to establish a mechanism for the issuance of Certificates of Compliance via which agricultural sector productivity-increasing investments will be registered.
[1] UVT Value 2020: $35,607 COP.
[2] The TRM (Market Representative Rate) from 16/07/2020 is used (3,611.61 COP/1 USD). This value may vary depending on the market.
