Free Zone

A free trade zone refers to a specific geographic space within a country where industrial activities for the production of goods and services, as well as commercial activities, are carried out.

These activities are carried out under special tax, customs and foreign trade regulations.

Free zones are specific areas in Colombia that are clearly defined within the national territory.

Various industrial activities are carried out in these areas, such as the production of goods and services, as well as commercial activities.

These activities are carried out under a set of special regulations related to taxes, customs and foreign trade.

Free trade areas, also known as Free Trade Zones, play an important role in promoting transportation, trade and logistics.

In particular, they facilitate the import and export of a wide range of goods.

There are eight Permanent Free Trade Zones and fourteen Special Permanent Free Trade Zones available in Colombia.

In the Free Trade Zone, no customs taxes, such as VAT and tariffs, are generated or required to be paid on imported goods. There is the possibility of exporting both to third countries and to the domestic market from the Free Trade Zone. In addition, goods of foreign origin that enter the Free Trade Zone may remain there indefinitely.

The free zone is the geographic area of the national territory where industrial or commercial activities of goods and services are developed in accordance with special tax and customs regulations.

The advantages of a Free Trade Zone:

- General income tax on the consumption of manufactured goods, production costs of labor and salaried employees. The exception is commercial users who are subject to shared prices. - Customs duties (VAT and ARANCEL) are not charged, and goods imported abroad are free of charge.

- Exemption of LAK raw materials, goods and finished products sold from the national customs territory to industrial users of the free trade zone. 

-VAT exemption for goods sold in foreign markets.

- Exports from the free trade zone to third countries are subject to international trade agreements.

- National origin is recognized for goods manufactured, elaborated, transformed in free trade zones or products of any elaboration process.

- Possibility of partial processing outside the free zone.

- Possibility of paying 100% for goods or services produced in the free trade zone in the country's territory with the corresponding tariff and payment of VAT for 16 costs only from third countries.

Disadvantages in a Free Trade Zone

The disadvantages of free trade zones are the complexity they can cause, identity modeling, the possibility of rodents entering and leaving, catching diseases from other countries, committing all kinds of crimes. Avoiding compliance with sanitary, phytosanitary and environmental requirements of free trade zones.

Tax cuts may not be as good as agreed, or there may be tariffs or positive taxes on imports from foreign countries. They do not allow warehousing of goods, equipment or others under any circumstances. This can be a big disadvantage because capacity is insufficient or poorly protected, because there is no real innovation in the process or there are delays during the delay. In domestic or international business, not as expected due to lack of production support services or neglect of operational advantages.

The Free Trade Zone is a way for countries to attract foreign investment to their borders. In this way they get some form of investment on the international financial maps, which is more visible and attracts money from investors and workers from other countries in the world.

In order to be in a Free Trade Zone, the new legal entity must be incorporated with registered office in the country and legal representation of a trustee or branch of a foreign company allowed by the Commercial Law.

Commercial Free Trade Zone: It is a warehouse where goods are offered for sale, use or consumption. Industrial Free Trade Zone: The objective is to create industries that process raw materials that will be exported to the rest of the world.

The central customs administration will carry out the import or export of goods from free zones, as well as the import of goods from ports or cargo, land through the institutions established in the free zones.