Tax benefits for food and beverage producers

Law 2010 of 2019 (Economic Growth Law), which largely replaced Law 1943 of 2018 (Financing Law) introduced several tax incentives for companies, including the one related to investments for the development of the Colombian countryside. This incentive consists of granting an exempt income for the term of ten (10) years, when the company complies with several requirements, namely: obtaining the approval of the Ministry of Agriculture on the investment project (which must justify its financial viability and economic convenience), hiring a minimum number of employees depending on the company's income, having incorporated the company between 2019 and before December 31, 2022, and accrediting the minimum investment in property, plant and equipment for a period of six (6) years.

The regulation establishes that the companies that intend to obtain this tax benefit "must have as their corporate purpose any of the activities that increase the productivity of the agricultural sector". Said activities, as expressly stated in the law, are those indicated in the International Standard Industrial Classification (Ciuu): Section A, divisions 1, 2 and 3 (Agriculture, Livestock, Hunting, Forestry and Fishing); and Section C, divisions 10 and 11 (manufacturing of food products and manufacturing of beverages), all those adopted in Colombia by means of Resolutions issued by the Dian.

The specific activities related to the processing of food products are: processing and preservation of meat (and meat products), fish, crustaceans, mollusks, fruits, vegetables and tubers, processing of oils and fats of vegetable and animal origin, processing of dairy products, processing of milling products, starches and starch products, processing of coffee products, coffee threshing, roasting and grinding of coffee and other coffee derivatives, processing of sugar (and its refining) and panela, processing of bakery products, processing of cocoa, chocolate and confectionery products, processing of macaroni, noodles, couscous and similar farinaceous products, processing of prepared meals and dishes and processing of other food products, and processing of prepared animal feeds.

Specific activities related to beverage processing are distillation, rectification and blending of alcoholic beverages, production of non-distilled fermented beverages, production of malt, production of beers and other malted beverages and production of non-alcoholic beverages, production of mineral waters and other bottled waters.

It is a great good idea to extend the tax benefits to these industries, since they are intensive in the use of raw materials from the Colombian agricultural sector, which is why benefiting them implies generating local agricultural production on a large scale. Likewise, this will encourage corporate social responsibility practices such as purchasing goods and services from locally sourced companies and implementing fair trade practices.