02 Mar Tax and customs benefits from investments in Renewable Energy in Colombia
With the purpose of bringing diversity to the actual energy supply system, and also to attract companies and individuals to invest in renewable energy projects in Colombia, Act 1715 of 2014 was enacted by the Government, granting the tax and customs benefits described below:
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 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. It is important to mention that IVA is 19% in Colombia.
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.