According to Law 1004 of 2005, a Free Trade Zone is defined as a delimited geographic area within the national territory, where industrial activities involving goods and services, or commercial activities, are carried out under special regulations in tax, customs, and foreign trade matters. 

What incentives can a Free Trade Zone offer?

Tax Benefits 

• A flat income tax rate of 20% will apply to industrial users of goods or services.* 

• Exemption from remittance tax on amounts sent abroad. 

• Exemption from value-added tax (VAT) on raw materials, parts, supplies, and finished goods sold from the National Customs Territory to Free Trade Zone industrial users or between them, provided they are necessary for their business purpose. 

• Dividends paid are exempt from income tax.

Foreign Trade Benefits 

• Indefinite storage of capital goods or merchandise without the payment of customs duties. 

• Exemption from customs duties on foreign capital goods, along with their spare parts, used for the development of the business purpose. 

• Free access of goods produced in the Free Trade Zone to the national market. 

• Definitive income from goods moving from the National Customs Territory is considered exports. 

• Domestic suppliers receive incentives for exports to the Free Trade Zone. 

• Only the nationalization of products sold to the National Customs Territory is subject to duties on the foreign portion added. 

Customs Benefits 

• Indefinite storage of merchandise. 

• Exemption from customs duties on foreign capital goods. 

• Free access of goods produced in the Free Trade Zone to the national market. 

• Definitive income from goods moving from the National Customs Territory is considered exports. 

• Domestic suppliers receive incentives for exports from the Free Trade Zone. 

• Only the nationalization of products sold to the National Customs Territory is subject to duties on the foreign portion added. 

• Permanent Free Trade Zone:

This is a zone where several companies (users) carry out their industrial, commercial, or service activities within a defined area. It is similar to an industrial park. (Also known as a park free trade zone or multi-enterprise zone).

• Special Permanent or Single-Enterprise Free Trade Zone:

This is a zone where a single company (industrial user), regardless of the geographic area in which it is located, can benefit from the advantages of a Free Trade Zone. These are high-impact economic and social projects for the country. It includes, among others, the following modalities: 

Goods. 
Services. 
Health services. 
Agro-industrial projects. 
Port companies. 
Conversion of existing businesses.

• Temporary Free Zone:

This is a zone authorized for holding fairs, exhibitions, conferences, and international seminars with significant importance for the country’s economy and international trade. 

Operator User 

A legal entity authorized to manage, administer, supervise, promote, and develop one or more free trade zones, as well as to qualify its users. In carrying out these activities, the Operator User will oversee goods under customs control and authorize their entry and exit operations, without prejudice to the powers of the National Tax and Customs Directorate (DIAN). 

Industrial Goods User 

A legal entity established exclusively in one or more free trade zones, authorized to produce, transform, or assemble goods through the processing of raw materials or semi-processed products. 

Industrial Services User 

A legal entity authorized to carry out the following activities in one or more free trade zones: 

• Logistics, handling, distribution, packaging, repackaging, labeling, or classification. 

• Telecommunications, information technology systems for capturing, processing, storing, and transmitting data. 

• Scientific and technological research. 

• Health assistance. 

• Technical support, maintenance, and repair of equipment, ships, aircraft, or machinery. 

• Auditing, administration, brokerage, consulting, or similar services. 

Commercial User 

A legal entity authorized to carry out marketing, commercialization, storage, or conservation of goods in one or more free trade zones. 

Support Companies 

Companies that provide services such as surveillance and maintenance, daycare, cafeterias, financial entities, restaurants, training, medical care, employee transportation, and other services required to support the operation of the free trade zone. These companies do not benefit from tax, customs, or foreign trade incentives. Industrial Goods Users and Industrial Services Users must be new legal entities and may simultaneously hold both statuses.