Three issues to be reviewed in the Project of modification to the Free Trade Zone Regime

December 15, 2020
6:35 pm

Three issues to be reviewed in the Project of modification to the Free Trade Zone Regime

1. E-commerce

It establishes the possibility for Free Trade Zone users to make sales over the internet, as long as the importation into the TAN is made under the modality of postal traffic and express shipments. However, it is important that the final rule clarifies several operational issues that make this type of sales viable, especially for those made by industrial users who produce goods in the Free Trade Zone.

In effect, if the good is produced with national raw materials, the rule states that a special import declaration must be presented in order to pay VAT, so it must be clarified in these cases who is going to be the declarant and responsible for the payment of VAT, whether the Free Trade Zone user or the postal traffic intermediary.

Similarly, it should be clear whether postal traffic intermediaries should qualify as commercial users in each of the Free Trade Zones, with a depot for express shipments, for the purpose of consolidating imported goods.

Likewise, it is necessary to indicate the document with which the goods will leave the Free Trade Zone, since, as the goods have not been previously transported, they do not have a postal traffic document that covers them, in which the corresponding customs duties are settled and which serves as a simplified import declaration.

2. Intangibles as part of the investment

The project establishes that it must be an intangible asset generated or formed by the industrial user after its authorisation or qualification in the Free Trade Zone, it must participate directly and permanently in the income-producing activity and it can only represent up to 20% of the investment.

The issue that needs to be clarified is how this intangible is to be valued, especially since it does not yet exist when the master plan or project is submitted to the user operator.

However, once the intangible has been generated or formed, another concern that arises is what evidence should be presented to prove the value of the intangible, to prove that it represents 20% of the value of the investment or that the user has committed to it.

This issue is of the utmost importance, insofar as compliance with the investment will depend on it without the risk of losing the rating, unless additional investments in real productive fixed assets are made in order to maintain it.

3. Export of services to reduce commitments

The project proposes that the industrial user of a special permanent Free Trade Zone for services, which in accordance with its internationalisation plan foresees annual exports of services for a determined amount, can reduce its employment and/or investment commitment.

Although it is indicated that the sale of services to nationals or persons not residing in Colombia is considered as export of services, by virtue of Law 7a of 1991, it is not indicated whether, in addition to the decreases in investment and/or employment, the requirements established in Article 481 of the E.T. must be met in order to apply the VAT exemption.

It is necessary to determine whether these are independent benefits or whether both should be combined. It should be borne in mind that the export of services can be configured in four modes, which do not necessarily comply with the tax requirements and could even go so far as to disregard the principle of exclusivity, as they are provided outside the Free Trade Zone facilities.

By: Tomás Barreto - Saberex Partner

tbarreto@saberex.com.co

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