Technical Analysis of the Special Economic and Social Zones (ZESE) Regime
What are the Special Economic and Social Zones (ZESE)?
The Special Economic and Social Zones (ZESE) is a special tax regime designed to offer preferential income tax rates and benefits on withholding tax. The primary objective of this regime is to attract both national and foreign investment, improve living conditions, and generate employment in cities and regions with high unemployment rates.
Legal Basis
The ZESE regime was created by Article 268 of Law 1955 of 2019. This law establishes ZESEs in the departments of La Guajira, Norte de Santander, and Arauca, as well as the capital cities of Armenia and Quibdó. The goal is to incentivize investment in these areas to contribute to their economic and social development.
Tax Benefits
Companies and enterprises that adopt the ZESE regime can enjoy:
- Preferential Income Tax Rate: Beneficiary companies receive a significant reduction in the income tax rate.
- Withholding Tax Benefits: Reduction or exemption from withholding tax to promote liquidity and reinvestment of profits in the designated areas.
Requirements to Qualify for the ZESE Regime
To benefit from the ZESE tax regime, commercial companies must meet the requirements established in Decree 2112 of November 24, 2019, which regulates Article 268 of Law 1955 of 2019. The requirements include:
- Economic Activity: Companies must engage in industrial, agricultural, commercial, tourism, or health activities.
- Regulatory Compliance: Companies must adhere to the established regulations and procedures to qualify and maintain ZESE status.
Objectives of the ZESE Regime
The ZESE regime aims to:
- Attract National and Foreign Investment: Encourage investors to establish and expand their businesses in the designated zones.
- Improve Living Conditions: Contribute to socioeconomic development by creating jobs and increasing economic activity.
- Generate Employment: Reduce unemployment rates by promoting new job opportunities in regions with the greatest needs.
The ZESE regime represents a comprehensive strategy to foster economic development in specific regions of Colombia, offering significant tax benefits to companies that contribute to investment and job creation in these areas.
