Colombia enhances tax incentives for renewables

• The procedures to protect earnings tax obligation reductions, value-added tax exclusions, customizeds duty exceptions, as well as sped up depreciation prices for sustainable tasks has been shortened to 45 days.

With the approval of Decree 829 of 2020 (Decreto 829 de 2020), the federal government of Colombia is assisting in accessibility to tax incentives defined in Law 1715 of 2014 by making the Energy Mining Planning Unit (UPME) the only entity that is permitted to determine which renewable energy projects are qualified to such fiscal advantages.

The moment needed to obtain approvals for the fiscal incentives from the National Authority for Environmental Licenses (ANLA) has actually been cut in half from three months to 45 days.

Legislation 1715 granted an extra deduction of earnings, applicable within a period of 5 years, for up to 50% of the worth of investments. It also introduced the exclusion of value-added tax (VAT) for the acquisition of goods and also services and also an increased devaluation that can not surpass 20% each year.

The expansion of the financial motivations was announced by the government in the National Development Plan 2018-22, in which it was decided that the revenue tax deduction went from 5 to 15 years. An automated VAT exclusion was also developed for the purchase of photovoltaic panels, inverters, and charge controllers for PV setups. With the issuance of Decree 829 of 2020, this earnings deduction is also regulated, enabling new companies to protect the benefit from the taxed year that adheres to the beginning of procedures for a task.

Under Law 1715, jobs that have actually already been reviewed by UPME as well as have actually certifications released with a desirable principle up until Dec. 31, 2019, might use such qualifications to make the rewards reliable, with no extra procedures. Likewise, Decree 829 of 2020 permits UPME to update the policies and also improve the treatments to access tax benefits.

According to the most up to date data from the International Renewable Energy Agency (IRENA), Colombia had a complete mounted solar capability of just 90 MW at the end of 2019. Nonetheless, concerning 341 solar projects have actually been approved or are under review in Colombia, according to a windows registry assembled by UPME.

Colombia intends to accumulate an 18.38 GW clean energy generation profile. Solar will certainly add 9.48 GW, hydro 4.45 GW, wind 2.55 GW, and also biomass 2 MW. Some 1.9 GW of capability will certainly also be secured from prepared thermoelectric assets, which create present from distinctions in temperature level.