Decree 1153 of 2020 issued by the Colombian Ministry of Finance regulates the mega investments regime referred to in Article 235-2 of the National Tax Code. We highlight the main regulations below:
(i). Mega investments in Colombia are those investments in productive property, plant, and equipment for the development of industrial, commercial and/or services, for a value of at least 30.000.000 UVT ($1.068.210.000.000 COP, equivalent to c. $285.807.931 USD). Additionally, the mega investment must create at least 400 direct jobs.
Investments in high-tech sectors must generate 250 jobs. For the aviation sector, the investment value must be of at least 2.000.000 UVT ($71.214.000.000 COP, equivalent to c. $19.053.862 USD) and create at least 400 jobs.
(ii). The mega investments projects must be qualified as “mega investment” by the Ministry of Commerce, Industry and Tourism. The qualification procedure is comprised of the following stages:
· The investor must file its virtual qualification request along with its annexes before the Ministry of Commerce, Industry and Tourism.
· The Ministry will request a technical concept regarding the feasibility of the investment to the corresponding entity of the sector in which the investment will be made. The specialized entity will have a 15-day term to provide the technical concept.
· The Ministry will review the technical concept provided by the specialized entity and could either:
1. Accept the investment qualification request as “mega investment”, which will be enforceable for 20 years counted as of the taxable year in which the administrative decision was notified by the Ministry. In any case such administrative decision must be notified before January 1st, 2024;
2. Instruct to rectify and/or complement the qualification request. The petitioner will have a 15 working days term to rectify and/or complement the request. Once the qualification request is rectified or complemented, the Ministry will have a 1-month term to accept or decline the request; or
3. Decline the qualification request.
· If the investment project is qualified as a mega investment, the investor may request to enter into a tax stability agreement with the National Tax Authority (DIAN), which term cannot exceed 20 years.
(iii). The applicable income tax rate for income caused by mega investment projects will be 27%. Income caused by other sources other than the mega investment will be taxed at the following rates: 32% in 2020, 31% in 2021 and 30% in 2022 and thereon.
(iv). When the mega investment is carried out through a local company or a permanent establishment, the revenue caused by the investment will not be subject to dividends tax, nor to any withholding income tax.
(v). The shareholders’ equity (patrimonio) related to the mega investment will not be subject to the wealth tax.
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