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Income tax exemption in the agricultural and livestock sector

Following the Covid-19 pandemic, different sectors of the national economy have been affected, including the agricultural sector.

Therefore, it is especially relevant to be able to benefit from tax incentives for companies seeking to reactivate the Colombian countryside by the year 2021.

Thus, in Cuadro Legal Abogados, your lawyers in Medellin, we accompany entrepreneurs and businessmen in their economic growth process, letting you know if your company could benefit from the income tax exemption for 10 years, when investing in the agricultural sector.

In this order of ideas, we present the requirements that your company must comply with in order to access the mentioned exemption:

  1. To have as its corporate purpose any of the activities indicated in the International Standard Industrial Classification (ISIC), Section A, division 01, division 02, division 03; Section C, division 10 and division 11, adopted in Colombia by Resolution of the National Tax and Customs Directorate (DIAN).


  1. Incorporated as of the entry into force of the Law


     



    1943


     of 2018 and start their economic activity before December 31, 2022.

  1. Submit its investment project to the Ministry of Agriculture and Rural Development, justifying its financial viability and economic convenience. Once the project has been submitted, the Ministry must issue an act of conformity and confirm that the investments increase the productivity of the agricultural sector by December 31, 2022.

  1. Comply with minimum investment amounts defined by the national government. These may not be less than one thousand five hundred (1,500) UVT and within a maximum term of six (6) taxable years. If the investment amount is not reached, the benefit is lost after the sixth year, inclusive.

  1. Proof of direct hiring through an employment contract. In addition, they must have a minimum number of direct employees, who cannot be administrators of the respective company or be members, partners, shareholders, co-participants, associates, cooperators, co-owners or consortium members of the same. Employees must have a vocation of permanence and perform functions directly related to agricultural and rural development activities.

The minimum number of jobs required will be directly related to the gross income obtained in the respective taxable year and will require a minimum investment in property, plant and equipment over a period of six (6) years. The foregoing, in accordance with the regulations issued by the National Government, within the parameters set forth in the following table:

tax benefits 2021

On the other hand, it is necessary to point out that this benefit will not be applicable when the workers that are incorporated to the new direct jobs generated have worked during the year of their hiring and/or the year immediately prior to this, in companies with which the taxpayer has economic ties or come from merger or spin-off processes carried out by the taxpayer.

These conditions must be met by taxpayers in all taxable periods in which the exempt income benefit is applied, who must be registered in the Single Tax Registry as taxpayers of the general income tax regime.

Finally, it is necessary to specify that this benefit of exempt income applies even in the entrepreneurial, investment or business scheme, whose activities or objectives are related to the agricultural sector, farmers’ associations or individual groups of farmers.



Source:


Decree 624, 1989, art 235-2.

Written by: Alejandra Cardona Mercado

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