Free trade zones in Colombia are delimited geographical areas that have a special customs and tax regime; their main goal is to promote investment and the potential of the companies that are established there. They have specific regulations, which result in well-structured processes that allow companies to take advantage of national and international market opportunities.
Free trade zone regulations in Colombia offer a series of benefits and advantages for companies to reduce their costs and improve their production efficiency.
Among the main advantages offered by free trade zones in Colombia are exemption from import and export taxes, income tax exemption and reduction of customs duties, which translates into lower production costs and greater efficiency in domestic and international markets. It should be clarified in this regard that companies do not pay customs duties (VAT and tariffs) on goods arriving at the Free Trade Zone, which translates into lower production costs and greater efficiency in domestic and international markets. Free Trade ZoneHowever, when the products are to be shipped out, they must do so, but this is still 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 follow the regulations of Colombia's free trade zones, which simplifies customs and tax procedures. This reduces bureaucracy and waiting times, saving time and resources in the import and export process.
In addition, 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 this universe of free trade zone regulations in Colombia that are important to highlight, understanding that they are very broad and are constantly being updated.
The Decree 2147 OF 2016 is a pillar for its operation, since it talks about the objectives of the free zones, its requirements, requirements to be a qualified user, and in the case of operator user, how it has to ensure that users comply with these regulations, i.e., 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 are the users of the free zones (operators, industrial users of goods, industrial users of services, commercial users, administrators and exhibitors).
Now, the regulations also state that:
"The Ministry of Commerce, Industry and Tourism shall declare the existence of free zones by administrative act, after approval of the Free Zone General Development Master Plan, favorable concept of viability of the Intersectorial Commission of Free Zones and verification of compliance with the requirements established in the present decree and in the other regulations in force on the matter."
All the regulations of free trade zones in Colombia are a bet to make them more organized, which allows the user companies to be more competitive, since the products when leaving a free trade zone have a support for the people who buy them knowing that they are legal merchandise, that is the general rule.
Free trade zones (user operator) 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 synergies 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 warned.
Penalties provided for in the Free Trade Zone Regulations in Colombia
From Western Free Trade Zone we present some of the penalties that are provided in the regulations, are points that must be taken into account to have a competitive process, since making mistakes could generate financial losses with negative impacts for companies:
1. To carry out in the authorized area activities different from those for which it was qualified or authorized.Ā
Failure to comply with the obligations acquired vis-Ć -vis the user operator user operator of the permanent free trade zone in the act of qualification.
3. Failure to comply with the procedures established in the free zone operations manual.
4. In the case of industrial users of special permanent free trade zones, not to report quarterly to the operator user and to the Ministry of Commerce, Industry and Tourism, under the conditions and terms established, the state of progress in the execution of the General Development Master Plan. Likewise, not to report the statistical information related to the activity developed in the free zone and other commitments derived from the free trade regime.
5. In the case of industrial and commercial users of permanent free trade zones, not to report quarterly to the operator user and to the Ministry of Commerce, Industry and Tourism, under the conditions and terms established, the state of progress in the execution of the General Development Master Plan, the fulfillment of the investment and employment commitments, the information related to the amounts of investment and employment generated by the users that did not have investment and employment commitments, as well as the statistical information related to the activity developed in the free trade zone and other commitments derived from the free trade regime.
6. To advertise or act as a free zone user without having obtained the respective qualification or after having lost it.
The penalties are applicable in UVT values and may even result in the loss of the qualification, which is issued by the Ministry of Commerce, Industry and Tourism.
On the other hand, there is the Decree 1165 OF 2019which provides guidelines and seeks to make operations within the free zones more flexible or to have a very detailed control of them. It is a decree that is divided into chapters, but -in particular- chapter VIII (8) is relevant at the time of approaching, validating and shaping the operations within the free zones.
- Import operations, i.e., on merchandise coming from the rest of the world to the free trade zone.
- Export operations are related to all merchandise leaving the free trade zone destined for other countries.
- Transfers between free trade zones are negotiations between the free trade zone and another free trade zone somewhere in Colombia.
- Transfers of rights operation, in relation to those activities that are carried out between users of the same free trade zone to develop any foreign trade operation within the free trade zone and that must be based on the regulations of the free trade zones in Colombia.
Regulations can often be seen as a barrier, but -precisely- it is the one that allows the structuring of processes, responsibilities and precisions that lead to an organization that is a guarantee for the people who purchase goods and products, above all, it opens great opportunities for those companies that are thinking of internationalizing their products.
Companies must break the cultural barrier of thinking that by being subject to a very well organized regulation it is easier to be sanctioned, but it forces them to implement quality processes with which they will be able to compete in the markets more efficiently, thanks to the regulations of free zones in Colombia.
