Free Trade Zone Regime in Colombia
BENEFITS
Colombia has a competitive free trade zone regime that grants the following benefits to businesses involved in the production of goods or the provision of services located in these zones:
- Single income tax rate of 20% (the current rate in the National Customs Territory is 32% for 2020, 31% for 2021)
- Customs taxes (VAT and customs duties) are not accrued or paid on merchandise that is introduced into the Free Trade Zone
- Possibility of exporting from a Free Trade Zone to third-party countries
- Goods of foreign origin introduced into the free trade zone may remain there indefinitely.
- VAT exemption for raw materials, parts, inputs, and finished goods that are sold from the national customs territory to industrial users of Free Trade Zone goods or services or among them
The regime includes two types of Free Trade Zones which have the same benefits:
Multi-user Free Trade Zones (legally called Permanent Free Trade Zones)
They are areas managed by one operator/user where multiple new companies that enjoy special tax and customs treatment are established.
To settle in a Permanent Free Trade Zone and to perform commercial or industrial activities and/or to provide services, the company must meet the following investment and employment requirements, based on the total amount of assets, within the first three (3) years of the project:
| TOTAL ASSETS (USD) | INVESTMENT AMOUNT (USD) | DIRECT JOBS |
|---|---|---|
| 0 – 112,538 | 0 | 7 |
| 112,764 – 1,125,388 | 225,078 | 20 |
| 1,125,614– 6,752.331 | 1,125,388 | 30 |
| More than 6,752,331 | 2,588,393 | 50 |
* This information is presented in US dollars at the exchange rate of USD 1 = COP 3,900. For 2020, the Current Legal Minimum Monthly Wage (SMMLV, per its Spanish acronym) is COP 877,803. The SMMLV as well as the exchange rate are subject to change.
Single Company or Special Permanent Free Trade Zone Regime
This regime allows for a free trade zone to be established in any part of the country for a new legal entity to invest in a project with a significant social and economic impact.
Investment and employment requirements for a project to operate under the Single Company Free Trade Zone are detailed below. These requirements, with a few exceptions, must be fulfilled within three years from the date a Free Trade Zone is declared.
| TYPE | ASSETS (USD) | INVESTMENT (USD) | DIRECT JOBS | OTHER REQUIREMENTS | PERIOD |
|---|---|---|---|---|---|
| GOODS | - | 34,146,26 | 150c | - | 3 years |
| SERVICES | - | 2,276,417 - 10,471,522 10,471,522 - 20,943,045 > 20,943,045 | 500 350 150 | - | 3 years |
| HEALTH SERVICES | - | 2,276,417 - 10,471,522 10,471,522 - 20,943,045 > 20,943,04 | Related jobs: 250 Related jobs: 175 Related jobs: 75 | 3 years | |
| AGROINDUSTRIAL PROJECTS | - | 17,073,134 | or 500 direct or related job | 3 years | |
| PORT COMPANIES | - | 34,146,269 | 20 | Related jobs: 50 | 3 years |
| COMPANIES ALREADY IN OPERATION | 34,146,26 | 157,528,12 | - | Double taxable net income | 3 years |
| DAIRY SECTOR COMPANIES | - | 1,138,208 | 50 | - | 3 years (Investment) 9 years (Employment) |
In Free Trade Zones for Goods, for every additional 23,000 SMMLV above the minimum required investment, the number of jobs to be created may be reduced by 15. Minimum required is 50 people.
*Amounts defined in Current Legal Minimum Monthly Wages (COP 887,803 for 2020.). Exchange rate USD 1 = COP 3,900.