02 Mar Tax and customs benefits obtained from investing in renewable Energy in Colombia
Act 1715 of 2014 was enacted with the intention to bring diversity to the actual energy supply system, and to attract companies and individuals to invest in renewable energy projects, by granting them tax and customs incentives.
Incentives are exclusively directed to those investors who invest directly in the research, development and production or generation of non- conventional energies in the country. This benefit consists in deducting, in a period no longer than 5 years after the investment is made, up to 50% of the amount invested, from the income tax liability.
The tax to be deducted annually however, may not exceed 50% of the net income of the taxpayer for that specific year.. In addition, it is a requirement in order to obtain this incentive, to obtain an environmental certification from the Ministry of the Environment.
Value Added Tax (IVA).-
In addition to this, the law grants an exception from IVA, on any purchase related to the instruments, machines and elements needed in the pre-investment or investment phases of the project. In order to obtain this incentive, the investor must have a certificate of all the equipment and services issued by the ministry where the reduction will be applied.
This law also grants an import duty waiver on equipment imported into the country, and supplies destined solely for pre-investment and investment projects.
The renewable energy market in Colombia is just opening. For more information on this topic, please contact us.
Jose A. Abusaid.