November 26 2001
Law 677/2001, which was recently approved by the Colombian government, has created Special Economic Zones for Exportation within the following municipal territories:
The government is empowered to regulate this law and extend the benefits of the Special Economic Zones for Exportation to other frontier municipalities.
This new regulation applies to new corporations that establish their business in these defined zones, in order to promote their development through the exportation of goods and services. It also applies to corporations that develop projects relating to urban infrastructure, roadways and public service grids.
In order to enjoy the benefits covered by this law, an admission contract must be agreed upon with the local municipality, the National Tax Authority and the Ministry of Foreign Commerce. This contract must last for between five and 20 years.
The tax regime that applies to the Special Economic Zones for Exportation is the same as that which applies to Free Industrial Trade Zones. As such, income derived from sales to outside markets is free from income tax. Foreign payments for interests and technical services are not subject to withholding at source in connection to income and remittance tax.
Finally, commercial corporations domiciled in the Archipelago of San Andres, Providencia and Santa Catalina (an existing Colombian Special Free Zone) that comply with the corporate requirements and execute the corresponding admission contract may also enjoy the benefits created by this law.
The enactment of this law creates interesting opportunities for new investments in Colombia, with special benefits for companies that invest in specific border zones. The government will have to develop and regulate this law in order to attract and encourage new investment. The government must also provide all new investors with sufficient warranties in order to allow them to enjoy these benefits.
For further information on this topic please contact Rodrigo Lozano at Posse, Herrera & Ruiz by telephone (+57 1 312 3124) or by fax (+57 1 3130259) or by email (firstname.lastname@example.org).
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