Bill to reform the tourism sector receives presidential approval

In accordance with the above, it should be mentioned that the Bill initially submitted has undergone several modifications during the legislative process [1], for which reason some of the most relevant modifications and additions in the approved Report are detailed below:  

A. Transitory VAT exemption for hotel and tourism services: The Report provides [2] a VAT exemption until December 31, 2021, for hotel and tourism services, including meeting tourism, congresses, conventions, and exhibitions [3], rendered to residents in Colombia by providers registered in the National Tourism Registry and due to their activities.

B. Exclusion of VAT in Franchise Contracts: The VAT exclusion would be extended until December 31, 2021[4] to the activities of dispensing food and beverages prepared in restaurants, cafeterias, ice cream parlors, greengrocers, pastry shops, bakeries, and self-service stores, which are carried out in commercial establishments developed through franchise contracts.

C. Transitory deduction of income tax: The right to deduct from income 200% of the value of salaries and social benefits, during the year 2021, would be granted to those national individuals and legal entities that develop hotel, travel agency, time-sharing and receptive tourism activities, with a commercial establishment in San Andres Island, Providencia and/or Santa Catalina and that have workers residing in the mentioned places.

D. VAT exclusion in the commercialization of handicrafts: It is foreseen that the commercialization of Colombian handicrafts would be excluded from VAT until December 31, 2021.

E. Subsidies to air transportation companies: A subsidy would be granted to air transportation companies for the provision of the essential public service in regions of difficult access and connectivity according to the routes determined by the Ministry of Transportation. The subsidy would be limited to cover the deficit registered by the company because of serving the routes.

F. Promotion of ecotourism and rural community tourism: The Report would oblige the National Government to implement plans and programs aimed at the promotion and development of ecotourism, prioritizing programs in Chocó, Bolívar and San Andres, Providencia, and Santa Catalina; it would also promote rural community tourism through access to incentives, strengthening the participation of organized communities and their offer of tourism services.

G. Tourism promotion program for Colombian residents abroad: It is proposed that ProColombia, together with the Ministries of Commerce, Industry and Tourism and Foreign Affairs, establish tourism promotion mechanisms to encourage Colombians living abroad to travel and enjoy tourism services in the country. To this effect, the dissemination of the most important events and the promotion of incentives to Colombian nationals are provided for.

H. Universal Accessibility and Inclusion Seal: The Ministry of Commerce, Industry and Tourism will recognize tourism service providers that include persons with disabilities in their staff, as well as those that remove barriers to access and enjoyment of tourism services for persons with disabilities. To this effect, the National Government will regulate the matter.

I. Health Tourism: Health tourism is recognized as that in which nationals and foreigners come toundergo an accredited medical, surgical or dental procedure, accessible with guarantees of safety and high quality; in such sense it is provided that the State shall promote and support health tourism, including making outreach programs to the offer.

J. Tourism for memory: The report states that the National Government shall promote and encourage tourism for memory as a contribution to peace, reconciliation, and national unity; however, it should be mentioned that its scope is not detailed.

K. Regulation for companies that commercialize and promote timeshare projects [5]: The Report seeks that the National Government regulates the activities developed by the companies that promote and commercialize timeshare and timeshare projects.  Initially, it provides that these companies must provide true, verifiable and sufficient information to avoid misleading consumers.

L. Responsibility of the legal representatives: It is provided that if a provider is sanctioned for not complying with the total rendering of services and not reimbursing the money, or for closing or disappearance of the company without meeting its obligations, the manager or legal representative may not register a new establishment in his name or as representative in the National Tourism Registry within 5 years following the sanction.

M. Prohibition in the protection of children and adolescents: It is prohibited to provide tourist lodging services and/or excursion services to minors when they do not have the authorization or accompaniment of at least one of their parents or legal guardians.

Finally, once the law is enacted, other modifications, burdens and benefits will arise for the companies of the sector, reason why the interested parties must verify its better application or adoption according to their case.

[1] The first debate of the bill was also analyzed by this firm by means of a Circular that can be consulted at the following link: Aspects to be considered in the bill that would promote the transformation of the tourism sector.

[2] In the first debate the exclusion of hotel and tourism services was provided for, being consistent with Article 4 of Legislative Decree 789 of 2020, however, the treatment in the new presentation is proposed as an exemption.

[3] The latter understood as those in which travel is made for a specific professional and/or business reason to attend a meeting, activity, event, conference, congress, trade fair, exhibition or any other professional or business reason.

[4] It is worth mentioning that pursuant to Legislative Decree 798 of 2020, such exclusion is in force until December 31, 2020.

[5] The figure of the timeshare tourism system is developed in Chapter IX of Title IX of Law 300 of 1996 and the Sole Regulatory Decree of the Commerce, Industry and Tourism Sector.