Tax benefits for the America's Cup 2020

On December 30, 2019, Law 2011 of 2019 was issued, whereby "exemptions from national taxes and customs duties are established for the realization of the men's international soccer championship, Copa América 2020".

The purpose of this regulation is to honor the agreements with the South American Football Confederation –“Conmebol”- for the realization of the men's international soccer championship, Copa América 2020.

The postulation of Argentina and Colombia as joint venues for the 2020 edition of the Copa America was subject to the presentation of a detailed proposal, which must include, among other matters, a series of "tax exemptions", which is why the national government submitted to the Congress of the Republic the project that ended up forming the aforementioned Law 2011 of 2019.

In this context, the precept contains a portfolio of tax benefits applicable in general terms to “Conmebol” and its subsidiaries, which are summarized below:

• They will not be liable for national taxes (such as income tax and complementary taxes), VAT or the levy on financial movements -GMF-.
• It shall not be understood that their activity during the period of the tournament constitutes a permanent establishment in Colombia.
• They shall not be subject to withholding of national taxes (income and GMF).
• Will be entitled to reimbursement of VAT incurred on goods and services purchased.
• They will be exempt from customs duties (tariffs and VAT) with respect to the importation of a series of goods included in a "non-exhaustive" list of goods associated with the tournament.
• Finally, the local authorities are urged to manage through their municipal councils and departmental assemblies the issuance of regulations exempting these subjects from the payment of territorial taxes.

It is important to emphasize that the granting of the benefits mentioned will be subject to the regulations to be issued by the National Government, which will provide the details of the lists of tax incentives and, among other matters, the procedure for the refund of taxes that may eventually be collected from the beneficiaries of the measure.

According to the explanatory memorandum of the law, the celebration of the America's Cup generates positive fiscal impacts inasmuch as:

(...) it is estimated that the increased economic activity derived from the America Cup increases the nation's income by 53,000 million pesos. Considering that the estimated fiscal cost of the tax exemptions granted to the event amounts to 38,000 million, it is concluded that the holding of the America's Cup 2020 has a positive fiscal impact for the country (...).

Additionally, the sporting event will have a positive impact on different economic sectors, such as infrastructure and tourism, generating employment and boosting the economy.

The America's Cup 2020 will serve tourists of different nationalities, activating important sectors in the country such as hotels, transportation, food, fun and entertainment, and of course trade, especially if we consider that according to the ranking made by the Tour Operators Association of the United States - Ustoa, for its acronym in English - Colombia is in first place among the top destinations for tourism this year.