Introduction of special tax regime for "mega-investments"
21 Aug 2020
The Ministry of Finance introduced a special tax regime for mega-investments (Decree 1157 of 2020), effective from 21 August 2020. Eligibility criteria include:
- New investments in industrial or commercial activities, exceeding 30 million tax value units (UVTs - is a value set by the Colombian tax authorities that is updated every year) and generating at least 400 new jobs;
- New investments exceeding 30 million UVTs and generating at least 250 new jobs in the high technology and electronic commerce sector; and
- New investments exceeding 2 million UVTs and generating at least 400 new jobs in the national air sector.
For these investments, the corporate income tax rate is 27%, down from the ordinary 32% for 2020; capital gains are taxed at 10% and income generated by projects developing hotel services is subject to the special 9% income tax rate. Accelerated depreciation is also available on property, plant and equipment and taxpayers under the mega-investment tax regime are not subject to the rules on the presumptive minimum income;
No withholding tax applies on profits related to mega investment projects. Nonetheless, dividends distributed as taxable (i.e. paid out of profits not taxed at the level of the distributing company) are subject to a 27% dividends tax rate; and assets that are part of the mega investment project are not subject to the wealth tax.
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Type:
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Promotion and facilitation (Investment incentives)
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Industry:
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Not industry specific
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Manufacturing
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Services (Transportation and storage, Accommodation and food service activities, Telecommunications, Computer programming, consultancy and related activities, Scientific research and development, Other service activities)
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Sources:
