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The tax reform bill would increase the combined income tax rate for FTZ users in at least seven percentage points.

The income tax rate for FTZ operators and industrial users would be 10 percentage points lower than the general income tax rate. In that sense, the income tax rate for such users would be 24% for 2017, 23% for 2018 and 22% from 2019. FTZ commercial users will be subject to the general income tax rate; this is 34% for 2017, 33% for 2018 and 32% from 2019.

Also, FTZ users whose tax base for income tax purposes is at least eight hundred million Colombian pesos (COP 800.000.000) would be subject to an income tax surcharge at a rate of 5% for 2017 and 3% for 2018. A discount of eight hundred million Colombian pesos (COP 800.000.000) shall be applied to the taxable base determined for calculating the income tax surcharge.

The tax reform bill foresees to repeal the income tax for equality (CREE). Hence, the differential CREE regime between FTZs declared until December 31, 2012 and since January 1, 2012, would disappear.

In conclusion, the combined income tax rate for FTZ operator and industrial users would be 29% for 2017, 26% for 2018 and 22% since 2019. In regards to FTZ commercial users, the applicable rates would be up to 39% for 2017, 36% for 2018 and 32% since 2019.

Regarding VAT, the tax reform bill foresees that the VAT taxable base for imports from FTZ’s or abroad that incorporate national components would be the same used for purposes of calculating the customs duties, adding such duties, adding the production costs and without discounting the value of the exported national components. This, regardless it is a FTZ declared until December 31, 2012 or since January 1, 2012.

It is important to mention that the tax reform bill does not differentiate between the existing types of FTZ’s. Consequently, the proposed tax regime would be applicable even to offshore FTZ’s.