Free trade zones in Colombia are geographically defined areas with a special customs and tax regime. Their main goal is to promote investment and the potential of the companies that establish themselves there. They operate under specific regulations, resulting in well-structured processes that allow companies to capitalize on opportunities in both the national and international markets.
The regulations governing free trade zones in Colombia offer a range of benefits and advantages that allow companies to reduce their costs and improve their production efficiency.
Among the main advantages offered by free trade zones in Colombia are the exemption from import and export taxes, income tax exemption, and reduced customs duties, which translates into lower production costs and greater efficiency in national and international markets. It should be clarified that companies do not pay customs duties (VAT and tariffs) on goods entering the free trade zone , but they must pay them when the products are leaving the zone. However, this remains a commercial advantage.
In addition to these tax benefits, organizations that establish themselves in free trade zones also have access to adequate infrastructure and specialized security, transportation, energy, and communications services. This allows them to improve productivity.
Another factor that contributes to increasing their competitiveness is that they comply with Colombian free trade zone regulations, which means they benefit from simplified customs and tax procedures. This reduces bureaucracy and waiting times, saving them time and resources in the import and export process.
Furthermore, Colombia's free trade zone regulations promote investment in research and development, leading companies to improve the quality and innovation of their products and services. This, in turn, helps them keep up with market trends and needs and offer innovative, high-quality solutions to their customers.
There are some key points within the universe of free trade zone regulations in Colombia that are important to highlight, understanding that it is very broad and constantly being updated.
Decree 2147 of 2016 is a pillar for its operation, since it talks about the objectives of the free zones, their requirements, requirements to be a qualified user, and in the case of the operator user, how it has to ensure that the users comply with this regulation, that is, it leaves clear guidelines so that both operators and users have clear rules of the game.
A first point worth clarifying about this Decree is that its Article 4 defines who the users of free trade zones are (operators, industrial users of goods, industrial users of services, commercial operators, administrators, and exhibitors).
Now, the regulations also state that:
"The Ministry of Commerce, Industry, and Tourism shall declare the existence of free trade zones through an administrative act, following approval of the General Free Trade Zone Development Master Plan, a favorable opinion of viability from the Intersectoral Free Trade Zone Commission, and verification of compliance with the requirements established in this decree and other applicable regulations on the matter."
All the regulations for free trade zones in Colombia aim to make them more organized, allowing user companies to be more competitive. When products leave a free trade zone, they have the guarantee that buyers know they are legal merchandise—that's the general rule.
The free trade zones (operator user) have the function of being the 'eyes' of the DIAN and the Ministry of Commerce, Industry and Tourism (MinCIT), for example, Zona Franca de Occidente works in synergy with the two entities so that the processes are transparent, both for the operator and for the users, since when irregular movements are detected the regulators must be notified.
Sanctions established in the Free Trade Zone Regulations in Colombia
From Zona Franca de Occidente, we present some of the sanctions stipulated in the regulations. These are points that must be taken into account to ensure a competitive process, since errors could lead to financial losses with negative impacts for companies:
1. Develop in the enabled area different activities for which you were qualified or authorized.
2. Failure to comply with the obligations acquired towards the user operator of the permanent free zone in the qualification act.
3. Failure to comply with the procedures established in the free trade zone operations manual.
4. In the case of industrial users of special permanent free trade zones , failure to report quarterly to the operating user and the Ministry of Commerce, Industry and Tourism, under the established conditions and terms, on the progress made in the execution of the General Development Master Plan. Likewise, failure to report statistical information related to the activity carried out in the free trade zone and other commitments derived from the free trade zone regime.
5. In the case of industrial and commercial users of permanent free trade zones, failure to report quarterly to the user operator and the Ministry of Commerce, Industry and Tourism, under the established conditions and terms, the status of progress in the execution of the General Development Master Plan, compliance with investment and employment commitments, information related to the investment and employment amounts generated by users who did not have investment and employment commitments, as well as statistical information related to the activity carried out in the free trade zone and other commitments derived from the free trade regime.
6. Advertising or acting as a free zone user without having obtained the respective qualification or after having lost it.
The sanctions are applicable to UVT securities and may even result in the loss of the rating, which is issued by the Ministry of Commerce, Industry and Tourism.
On the other hand, there is Decree 1165 of 2019 , which provides guidelines and aims to make operations within free trade zones more flexible or to implement very detailed controls. This decree is divided into chapters, but Chapter VIII (8) is particularly relevant when addressing, validating, and implementing operations within free trade zones.
- Import operations, that is, merchandise coming from the rest of the world to the free zone.
- Export operations relate to all merchandise leaving the free trade zone for other countries.
- Transfers between free trade zones are negotiations that take place between the free trade zone and another zone in some part of Colombia.
- Transfer of rights operations, related to those activities carried out between users of the same free trade zone to develop any foreign trade operation within the free trade zone, which must be based on the regulations of free trade zones in Colombia.
Regulations can often be seen as a barrier, but they are precisely what allows for the structuring of processes, responsibilities, and precisions that lead to an organization that provides a guarantee for the people who purchase goods and products. Above all, they open up great opportunities for companies considering internationalizing their products.
Companies must break down the cultural barrier of thinking that being subject to well-organized regulations makes it easier to receive a sanction. On the contrary, it forces them to implement quality processes that will allow them to compete more efficiently in the markets, thanks to the regulations governing free trade zones in Colombia.