Free Trade Zone Regime in Colombia
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 35% for 2022).
- No customs duties (VAT (Value Added Tax) and tariffs) are levied or paid on goods 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.
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 - 119.652 | 0 | 7 |
| 119.652 - 1.196.548 Million | 195.039 million | 20 |
| 1.196.549 – 7.179.271 Million | 975.184 million | 30 |
| More than 7.179.281 Million | 2.243.042 million | 50 |
* This information is presented in US dollars at the exchange rate of USD (United States Dollars) 1 = COP 3,915. For 2022, the Current Legal Minimum Monthly Wage (SMMLV, per its Spanish acronym) is COP 1.000.000. 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 | TERM |
|---|---|---|---|---|---|
| GOODS | - | 29.243.655 | 150 | - | 3 years |
| SERVICES | - | 2.028.860 - 9.333.054 9.333.055 – 18.666.109 > 18.666.110 |
500 350 150 | - | 3 years |
| HEALTH SERVICES | - | 2.276.417 - 10.471.522 10.471.522 - 20.943.045 > 20.943.045 |
250 175 75 |
Direct job: 250 Direct job: 175 Direct job: 75 |
3 years |
| AGROINDUSTRIAL PROJECTS | - | 17.073.134 | 500 | 3 years | |
| PORT COMPANIES | - | 34.146.269 | 20 | Direct job: 50 | 3 years |
| COMPANIES ALREADY IN OPERATION | 34.146.269 | 157.528.122 | - | Duplicate the net taxable income | 3 years |
| DAIRY SECTOR COMPANIES | - | 1.138.208 | 50 | - | 3 years (Investment) 9 years (Employment) |
For each additional US $5.8MM to the minimum investment required, the number of jobs to be created may be reduced by 15, but in no case less than 50. Minimum required is 50 people.
* Amounts defined in Current Legal Minimum Monthly Wages (COP 1.000.000 for 2022.). Exchange rate USD 1 = COP 3,915.
For more information about the free trade zones, visit Chapter 4 of the Legal Guide for doing business in Colombia.
