In the quest to stimulate foreign investment and promote economic development, the country has established a model of benefits in Colombia's free trade zones. These delimited areas offer a business-friendly environment and provide a series of customs and tax benefits, making Colombia an attractive destination for investors.
Precisely, in the constant idea of strengthening the economy, free zones are an essential engine for development, it is important that entrepreneurs understand the benefits in Colombia's free zones and thus measure their positive impact on the Colombian business landscape.
For example, Analdex indicated that "the recent decision of the Constitutional Court not to tie the 20% income tax rate with internationalization plans to free trade zone users, qualified before December 13, 2022, allows us to have a clearer path for next year. The external sales of these zones, between January and August 2023, grew 17.3%, registering US$2,361 million, according to Dane figures".
In other words, it foresees an excellent 2024, since the Court's decision is that user organizations are not obliged to comply with an export requirement, nor subscribe to an internationalization plan to benefit from a preferential rate of 20% on their income tax, being one of the key benefits.
Among the achievements, according to the Ministry of Commerce, Industry and Tourism, it is highlighted that "the 122 free trade zones established in the country, between 2007 and 2021, have accumulated investments for $44 billion, of which 13% represent direct foreign investment and generate 114,603 direct and indirect jobs in the 22 departments where they are present".
What are free zones? To begin this tour, it is vital to understand what free trade zones are. These geographically delimited areas are designed to promote investment, production and exports. In Colombia, their importance has been increasing thanks to the benefits in Colombia's free zones, which made them a strategic component of the economic policy.
From Zona Franca de Occidente, we will cover those multiple benefits that are provided; in our case, in particular, there are some such as:
Benefits in Colombia's free trade zones, customs part
Attraction of foreign investment
They are magnets for international investors. The reason? Flexible customs policies that encourage the entry of foreign capital and technology, which are among the most important key benefits.
Facilitating imports and exports
Companies operating in free trade zones enjoy simplified customs procedures. This streamlines the flow of trade, which reduces associated costs.
Storage and processing
They allow the storage of goods without payment of taxes and facilitate the transformation of products, adding value to the production chain, showing more benefits in Colombia's free trade zones.
Tariff exemption
One of the major attractions and key benefits of free trade zones is the exemption of tariffs. Organizations operating within these areas have the alternative of importing and exporting goods without incurring the costs associated with customs duties. This advantage reduces operating costs and improves the competitiveness of companies in international markets.
Tax reduction
Among the benefits in Colombia's free zones are significant tax benefits. Companies enjoy exemptions or reductions in income and other local taxes. This favorable tax policy is an attraction for foreign investment, stimulating economic growth in the region.
Streamlining customs procedures
Efficiency in customs procedures is another distinctive feature of free trade zones. The simplification and streamlining of procedures facilitates the flow of goods, reducing waiting times and improving logistical efficiency, which is one of the key benefits, resulting in smoother trade and lower operating costs for companies.
Employment generation and economic development
Job creation is one of the key direct benefits of free trade zones. The installed companies generate local job opportunities, contributing to the economic development of the surrounding community. In addition, the attractiveness of these zones attracts additional investment, creating a multiplier effect on the regional economy.
Incentives for research and development
Some free trade zones offer specific incentives for research and development (R&D) activities. This encourages innovation and the adoption of new technologies, positioning companies in these areas at the forefront of global competitiveness, leaving key benefits for the region and, in general, the country, strengthening key benefits.
Challenges and considerations
Despite their many benefits in Colombia's free trade zones, it should be made clear that they are not without their challenges, for example, in environmental management, which are issues that countries must address to ensure sustainable and ethical growth.
In the case of Zona Franca de Occidente, we have a robust sustainability plan as part of the UNIDO/UN Industrial Eco-Parks program, and we are also an industrial park with a GREEN SEAL.
One of the most visible actions is that the free trade zone has the capacity -through our ponding- to collect 32,000 M3 of rainwater to distribute it around the park, providing key benefits for the care of the environment.
There is no doubt that free trade zones are economic engines, offering key benefits that go beyond simple tariff exemptions. From tax reductions to the stimulation of research and development, these areas are strategic tools for business growth and economic development at a global level.
By considering free trade zones as a location, organizations gain competitive advantages and contribute to the economic and social progress of the communities where they operate, generating key benefits for them.
Discover the potential of free trade zones and take advantage of them so that your business can obtain benefits you never knew about! Ask for personalized attention and we will gladly talk about how you can change your company.
