THE DEADLINE TO ACCESS THE EXEMPTED INCOME TAX BENEFIT FOR ORANGE ECONOMY COMPANIES IS EXTENDED!
Article 1.2.1.22.47 of Decree 286 of 2020 initially established that orange economy companies were those legal entities that pay income tax under the ordinary regime that were domiciled in Colombian territory, the corporate purpose of which was focused on the development of technological value-added industries and creative activities and, in addition, the companies had to be incorporated and start their economic activity before the thirty-first (31st) of December of 2021.
However, article 44 of Law 2155 of September 14, 2021 amended this term and provided that for the orange economy companies to apply for the exempted-income tax incentive, they must have ben incorporated and start their economic activity before June 30, 2022, on top of complying with the other requirements.
However, in order to classify the orange economic activities in a more accurate manner, it was determined that they will be governed by the International Standard Industrial Classification of all Economic Activities (ISIC). The orange ISICs are divided into three large groups: (i) Arts and Heritage; (ii) Cultural Industries; and, (iii) Creative Industries, New Media and Content Software. Each of these groups contains full inclusion and partial inclusion activities.
Once it is verified in the ISIC that the company effectively carries out an orange economy activity, it shall be necessary to verify that the company also meets the following requirements: (i) to have its main domicile within the Colombian territory; (ii) to be legally established; (iii) to have taxable annual gross income of less than (80,000) UVT, which is equivalent to COP 3,040,320,072 for 2022; (iv) to be entered in the Single Tax Registry as a taxpayer of the ordinary income tax regime; (v) to have an investment amount of 4,400 UVT – equivalent to COP 167,217,600, by 2022 – in a maximum term of 3 fiscal years; and (vi) to comply with the minimum numbers of jobs that range between 3 and 8 employees depending on the gross fiscal income of the company.
Finally, once all the requirements have been verified, a request for qualification of the investment project must be filed online with the Orange Economy Committee of the Ministry of Culture. Subsequently, the project’s compliance is verified and the Minister of Culture issues the administrative act of conformity or non-conformity, with the prior concept of the Orange Economy Committee of the Ministry of Culture, within thirty (30) business days after the date in which the project is presented.
Should you require further information, please do not hesitate to contact us:
Ernesto Cavelier
ernesto.cavelier@phrlegal.com
Margarita Jaramillo
margarita.jaramillo@phrlegal.com
