These are the benefits of Free Trade Zones in Colombia
Colombia stands out for being an investor-friendly country that welcomes and drives business growth across the region. This success is supported by a range of incentives and tools available to investors, with Free Trade Zones serving as a clear example of these competitive advantages.
Colombia has a Free Trade Zones robust network that have become the ideal places for investors to position their goods both nationally and regionally. Discover here what these Free Trade Zones consist of and the benefits they provide to international businessmen.
What is a Free Trade Zone?
To start with this topic, is important to have a clear idea about what a Free Trade Zone is. In Colombia these are defined as territorial areas in which multiple companies are installed and enjoy a special tax and customs treatment. These have been designed to develop highly productive and competitive industrial processes.
To settle in a free zone in Colombia and develop commercial or industrial activities related to goods and services, companies must comply with certain requirements that are already defined by national laws, favoring the positioning of new businesses in the country.
How do Free Trade Zones work in Colombia?
Colombia already has several years of experience operating with Free Trade Zones. The necessary time to have a strong regulation on the operation of these industrial spaces. This is how the two types of Free Trade Zones that exist in the country have been established, the Permanent Free Trade Zones and the Special Permanent Free Trade Zones. Get to know them here:
- Permanent Free Trade Zone: this is a space for the industrial production of multiple companies. In these zones companies are able to produce and store goods that will be commercialized in the country or exported to other destinations. In this area companies have tax benefits and special permits for importing and storing inputs and finished goods.
- Special permanent free zone (or one-business free trade zone): this is a modality that allows the recognition of a Free Trade Zone anywhere in the country to a new legal entity for the development of an investment project of high economic and social impact. All this only if certain investment and employment requirements are met. These requirements, with some exceptions, must be fulfilled within 3 years following the Free Trade Zone declaration.
Under these modalities, more than one hundred Free Trade Zones have been created in Colombia, covering a large part of the national territory and providing the possibility for hundreds of companies to invest in the country. Places such as Bogota, Barranquilla, Cartagena and Cali have become some of the cities that host Free Trade Zones in the country.
Currently there are already more than a thousand companies located in these places enjoying the numerous tax and logistic advantages for businesses they can find there.
Discover why Colombia is a Technology Innovation Hub here.
Which are the benefits of a Free Trade Zone?
Free Trade Zones (FTZs) in Colombia offer a wide range of advantages for both domestic and foreign businesses. Designed to stimulate economic activity, these zones serve as strategic hubs for companies looking to expand their operations within Latin America. Colombia’s privileged geographic location — at the heart of the Americas — makes it an ideal gateway to regional and global markets. These are some of those benefits:
- The companies located in Free Trade Zones in Colombia have a single income tax rate of 20%, obtaining a reduction of operating costs.
- In these zones there are no customs duties (VAT and tariffs) to be paid on goods that are introduced there, which allows the necessary supply for the operation of the businesses.
- Companies have the possibility of exporting their goods from the Free Trade Zones to other countries or trading them in a national market with more than 50 million consumers.
- Goods of foreign origin introduced to the Free Trade Zone may remain in them indefinitely, which offers greater flexibility to companies when operating in the country.
- The companies located in the Free Trade Zones have VAT exemption for raw materials, parts, inputs and finished goods sold from the national customs territory to industrial users of goods or services of Free Trade Zones.
These are the benefits that you as a businessperson can obtain by investing in Colombia, the country of beauty, and establishing your company in one of the national Free Trade Zones. Invest in Colombia and explore the benefits of foreign direct investment, along with international trade opportunities. Learn more about investing in Colombia here.
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