Incentives for doing business in tourism and hotel sector

1. PROCOLOMBIA.CO
I N C EN T I V E S FOR D OI N G BUS I N E SS I N
COLOMBIA 2016
TOURISM AND HOTEL SECTOR
Santa Teresa Hotel - Cartagena de Indias

2. PROCOLOMBIA.CO INCENTIVES FOR DOING BUSINESS IN TOURISM AND HOTEL SECTOR 32
In order to enhance the advantages of Colombia in
tourism and to encourage investment and job creation
in all of the regions, the Colombian government
established a series of tax incentives addressed to do
business this sector. ProColombia presents a general
view of such incentives as well as the procedures and
requirements for its application.
DISCLAIMER
The purpose of this document is purely informative and it is not intended to provide legal
advice.Therefore,thoseusingthisdocumentshallnotbeentitledtobringanyclaimoraction
against ProColombia or its directors, officers, employees, agents, advisors or consultants
arisingfromanyexpenseorcostincurredintoorforanycommitmentorpromisemadebased
on the information contained in this document.
We strongly advise that the investors, companies and in general, readers who make use
of this document, consult their own legal advisors and professional consultants regarding
investment in Colombia.
SUBSECTOR INCENTIVE REGULATION
Hotels
Income tax exemption for hotel services provided in new hotels totally
or partially built in at least a 61% between january 1, 2003 and
december 31, 2017
Tax Code. Article, 207-2
num 3.
Income tax exemption for hotel services provided in hotels remodeled,
reshaped or extended between january 1, 2003 and december 31,
2017
Tax Code. Article, 207-2
num 4.
Ecotourism
Income tax exemption for ecotourism services certified by Ministry of
Environment or the competent authority until december 31, 2022.
Tax Code. Article, 207-2
numl 5.
Tourism
services
provided to
non-residents
IVA tax exemption with refund bimonthly for tourism services provided
to non-residents, used in colombian territory and derived from:
• Packages sold by operator agencies or hotels registered in the Tourist
Nacional Registry,
• Tourist packages sold by hotels registered in the Tourist Nacional
Registry to operator agencies provided that such services shall be
used in te Colombian territory by non-residents.
Tax Code.
Article 481 lit. d.
Special
incentive –
San Andres
Income Tax exemption for the provision of tourist services among
others, by companies constituted and established in San Andrés Islands
since january 1, 2013.
Law 1607 of 2012

3. INCENTIVES FOR DOING BUSINESS IN TOURISM AND HOTEL SECTOR 5PROCOLOMBIA.CO
INCOME TAX EXEMPTION
FOR HOTELS
Labor
incentives
Income Tax deduction of payroll contributions and others derived from
the labor contracts of:
• New employees under 28 years old.
• New employees in disability, displacement or reintegrate situations.
• New female employees up to 40 years old, unemployed for more
than 1 year.
• Employees with less than 1.5 minimum legal monthly wage.
Law 1429 of 2010
subsidy granted in order to promote the first employment for people
between 18 and 28 years old with any level of education without
previous formal related experience. The subsidy is granted for 6 months
in a range from USD$ 225 and USD$ 309 aprox.
Resolution 347 of 2015
from the Ministry of
Labor
Income Tax deduction of the 200% of the salary and social benefits
paid to employees with no less of 25% of disability certified.
Articles 24 and 31 Law
361 of 1997
Santa Clara Hotel - Cartagena de Indias
San Fernando Plaza Hotel - Medellín

4. PROCOLOMBIA.CO INCENTIVES FOR DOING BUSINESS IN TOURISM AND HOTEL SECTOR 76
1.1. INCOME TAX EXEMPTION FOR HOTEL SERVICES IN NEW HOTELS
BUILT ENTIRELY OR AT LEAST IN A 61% BETWEEN 1 JANUARY 2003
AND 31 DECEMBER 2017:
1.2. INCOME TAX EXEMPTION FOR HOTEL SERVICES PROVIDED IN
REMODELED HOTELS AND/OR EXPANDED BETWEEN THE 1ST OF
JANUARY 2003 AND THE 31ST OF DECEMBER 2017:
• Since 2003, the hotel services provided in new hotels built before
December 31 of 2017 are exempt from Income Tax for a period of 30
years (Tax Code Article 207-2 number 3).
• Considering the significant investments that have been made in the
hotel sector and that the deadline to access this incentive is about to
expire, the government decided that the hotels that have not finished
building before the 31st of December of 2017 but achieve at least a
61% of its hotel infrastructure construction before that date, are eligible
for acceding to this benefit (Decree 463 of 2016).
• This means that, hotel services provided, not only in the new hotels
built between the 1st of January 1 of 2003 and the 31st of December
31 of 2017, but also those who prove 61% of hotel infrastructure
construction within the same period are exempted from tax income
for 30 years.
• Since 2003, hotel services provided in hotels remodeled and/or expand before
the 31st of December 2017 are exempted from rent for a period of 30 years (Tax
Code Article 207-2 numeral 4).
• This exemption is equivalent to the proportion of the value of the renovation
and/or expansion in the fiscal cost of the property remodeled and/or expanded,
for which prior approval of the project by the Urban Curator and the City Hall,
the domicile of the remodeled property and/or expanded. is required In all cases,
for the approval of the exemption, certification of the Ministry of Commerce,
Industry and Tourism is required.
• The percentage of 61% construction of hotel infrastructure will
be certified by the Ministry of Trade, Industry and Tourism. However,
it is still pending that the Ministry issues a resolution in which the
procedure and criteria to be taken into account for this aspect shall
be established.
• The 30 year exemption begins to run from the taxable year when
operations begin at the respective hotel.
61%
30

5. PROCOLOMBIA.CO INCENTIVES FOR DOING BUSINESS IN TOURISM AND HOTEL SECTOR 98
• Fortheapplicationofthetwoincentives,hotelservicesmeansaccommodation,
feeding and all other basic and/or complementary services and accessories
provided by the operator of the hotel establishment.
• Incomes derived from services of motels, nursing homes and similar
establishments are not covered by the exemption of income tax under these
two incentives.
• That the given activity corresponds to duly authorized hotel
services;
• That the value of income tax requested as exempt in the
respective tax year correspond to hotel services provided in new
hotels built from the 1st of January 2003 on;
• That maintains accounting records separated of the revenue of
hotel services and other activities.
Registration in the National Register of Tourism of the Ministry of Commerce,
Industry and Tourism.
Certification issued by the Ministry of Commerce, Industry and Tourism,
on the provision of hotel services in the new establishment or remodeled
establishments and/or expanded as concerned. For these purposes, the
taxpayer must apply annually to the Ministry of Commerce, Industry
and Tourism or to the delegated entity for this purpose, verification of
1.3. TYPE OF HOTEL SERVICES COVERED BY THE BENEFITS:
1.4. REQUIREMENTS FOR THE APPLICATION OF THESE INCENTIVES
(DECREE 2755 OF 2003):
the provision of hotel services in the facilities of the new, remodeled
or expanded hotels, as appropriate, from which a Act will be signed by
the parties, the terms and conditions will be established by the Ministry.
Certification issued by the Urban Curator, the Mayor's Office, the Ministry
of Planning or the entity acting in its place of property domicile, in which
establishes the approval of the construction project of the new establishment
or approval of the remodeling project and/or hotel extensions as appropriate.
In the case of hotel services in new hotels built fully or partially in at least
61%, must additionally be certified by the Legal Representative and the
Auditor and/or Certified Public Accountant, which establishes:

6. PROCOLOMBIA.CO INCENTIVES FOR DOING BUSINESS IN TOURISM AND HOTEL SECTOR 1110
In the case of hotel services provided in remodeled hotels and/or expanded
must additionally have:
Signed certification by an architect or civil engineer with professional
license in force that confirms the realization of the remodeling and/or
extension made, when these do not require construction license and
urbanism license.
Certification of the Legal Representative and the Auditor and/or Public
Accountant taxpayer beneficiary of the exemption which establishes:
• Tax cost of the property remodeled and/or expanded;
• Total value of the investment made by the renovation
and/or expansion;
• The proportion representing the value of the renovation
and/or expansion in the fiscal cost of the remodeled
property and/or expanded;
• That maintains accounting records separated of the
revenue of hotel services and other activities.
INCOME TAX EXEMPTION
FOR ECOTOURISM
Visus Hotel Boutique & Spa - Coffee Cultural Landscape

7. PROCOLOMBIA.CO INCENTIVES FOR DOING BUSINESS IN TOURISM AND HOTEL SECTOR 1312
2.1. CONCEPT AND SCOPE OF APPLICATION OF THE BENEFIT
• The ecotourism services certified by the Ministry of Environment or competent
authority are exempt from income tax until the 31st of December of 2022 (Article
207-2 paragraph 5)
• For purposes of this benefit, ecotourism services will be understood as the
organized activities directly related to the care and training of visitors in areas
that are especially naturally attractive (Decree 2755 of 2003 article 10 and
following):
Accommodation and lodging services: The lodging and
accommodations provided in infrastructures whose construction
and operation is governed by sustainability and low environmental
impact, among other things, design, materials used in construction
and maintenance, power generation, management of wastewater
and solid waste and use of inputs.
Interpretation of natural heritage: It is the communication process
designed to reveal meanings and interrelationships of the natural
heritage and cultural manifestations associated with this. This process
can be supported by infrastructure such as trails, environmental
interpretation centers, of heritage, of sustainable management
of natural resources and knowledge of nature. The interpretation
of natural heritage infrastructure must be developed in which the
design, construction and operation is governed by sustainability and
low environmental impact, also interpreters must be trained in the
knowledge of the dynamics of ecosystems and their conservation area.
Transport: It is that developed as part of the ecotourism activity in
the natural area and direct access to it, to operate using systems
and fuels of low noise, atmospheric and terrestrial environmental
impact, in accordance with the rules governing the matter.
Food: The supply to the visitors finished or natural food products
whose origin is local or of the surrounding natural areas and
for the processing or production preferably using organic or low
environmental impact methods.
Eco-activities: These are designed as part of an ecotourism trip
to offer visitors recreation, properly coordinated by a guide or a
professional of the activity and environmentally compatible with
the natural values of the respective area.

8. PROCOLOMBIA.CO INCENTIVES FOR DOING BUSINESS IN TOURISM AND HOTEL SECTOR 1514
2.2. REQUIREMENTS FOR THE APPLICATION OF THE
INCENTIVE (DECREE 2755 OF 2003):
• Registration in the National Registry of Tourism, when the activity is developed
by tourism service providers, in accordance with the provisions of Law 300 of
1996 and its regulations.
• Certification stating that the ecotourism services rendered meets the purposes
specified in Decree 2755 of 2003 for which the taxpayer must apply annually the
corresponding certification to the Ministry of Environment, Housing and Territorial
Development or the competent environmental authority, as follows:
• Certification issued by the Legal Representative and the Auditor and/or Public
Accountant, as appropriate, on the value of the income earned in providing
ecotourism services during the respective fiscal year.
• Certification Auditor and/or Public Accountant of the company in which it is
established that there is separate accountability of the generated revenue by the
provision of services of exempt ecotourism of the income tax and income arising
from other activities accounting by the company.
• When ecotourism services are provided fully or partially in areas of the
System of Natural National Parks or the Nature Reserves of the Civil
Society duly registered, the certificate shall be issued by the Ministry
of Environment, Housing and Territorial Development through Special
Administrative Unit of the System of National Parks;
• When ecotourism services rendered in protected natural areas of
municipal, regional or departmental level and in other areas with special
naturalattraction,certificationwillbeissuedbytheRegionalAutonomous
Corporation or Sustainable Development, by environmental authorities
of the Big Urban Centers or by the District environmental authorities
dealing Law 768 of 2002 in the area of their respective jurisdictions.
In the case in which such activities take place in jurisdictions of more
than one of these authorities, the taxpayer may apply for certification
to any of them. In this case the environmental authority must request a
favorable concept to the other competent environmental authorities in
the area where the mentioned ecotourism services are provided.

9. INCENTIVES FOR DOING BUSINESS IN TOURISM AND HOTEL SECTOR 17PROCOLOMBIA.CO
EXEMPTION FROM VAT FOR
TOURISM SERVICES PROVIDED
TO NON-RESIDENTS
3.1. CONCEPT AND SCOPE OF APPLICATION OF THE BENEFIT
In accordance with the Tax Code (Article 481 literal d.), the tourism services provided
to non-residents are VAT exempted with refund bimonthly provided that such services
are derived from:
For purposes of this exemption, the quality of non-resident is proved with passport,
Andean card or MERCOSUR, together with the respective valid visa TP7 (pensioners,
medical treatment, etc.), TP11 (tourism/recreation) or TP12 (attendance to events
or meetings) or permits PIP3 (medical treatment), PIP5 (tourism/recreation), PIP6
(attendance to events or meetings), PIP10 (granted to foreigners of European
nationalities). The Colombian nationals may prove the non-resident quality by
submitting documentation issued by the authorities of the country of residence
(Decree 297 of 2016).
• Sold packages by operating agencies or hotels registered in the National
Register of tourism,
• Tour packages sold by hotels registered in the National Register of
tourism to operating agencies, when tourism services are being used in
the national territory by non-residents.
Marriott Hotel - Cali

10. PROCOLOMBIA.CO INCENTIVES FOR DOING BUSINESS IN TOURISM AND HOTEL SECTOR 1918
3.1. REQUIREMENTS FOR THE APPLICATION OF THE INCENTIVE
(DECREE 297 OF 2016):
• For the application of this benefit, hotels must invoice to the operating agencies
the hotel services provided in the country, discriminating each one of them and
liquidating VAT at a rate of zero (0%), as long as the beneficiary is a non-resident,
and regardless of whether considered individually rendered gratuitously or onerous.
• For control purposes, the hotels must keep a record of hotel services sold to non-
residents in package tours, either directly or through operating agencies, with the
corresponding billing and photocopy of the mentioned documents Decree 297 of
2016. Also, operating agencies should keep a register of tourist services sold in
the form of plans or touristic package to abroad residents, with the corresponding
billing package.
• For cases of tourist services originating in packages purchased through e-commerce
or any other means, after the entrance of the non-resident to the country, the service
provider will be responsible for obtaining and keeping a copy of the documents
that proves the non-resident quality. Without such documents it, the corresponding
exemption or refund shall not be applicable.
SPECIAL INCENTIVES FOR
TOURISM IN THE ARCHIPELAGO
OF SAN ANDRES
Casa Harb Hotel Boutique - San Andres Islands

11. PROCOLOMBIA.CO INCENTIVES FOR DOING BUSINESS IN TOURISM AND HOTEL SECTOR 2120
4.1. CONCEPT AND SCOPE OF APPLICATION OF THE BENEFIT
(LAW 1607 OF 2012)
4.1. REQUIREMENTS FOR THE APPLICATION OF THE INCENTIVE:
The provision of tourism services and other economic activities, provided by
new companies that are formed, effectively install and develop the activity in
the archipelago department of San Andrés, Providencia and Santa Catalina,
are exempted from Income Tax from the 1st of January 2013.
The exemption applies until the year 2017.
• Applicant companies to the benefit, through employment contract
must link a minimum of twenty (20) employees and increase annually
by ten percent (10%) jobs in relation to the number of workers in the
previous year.
• Employees must be raizal link and residents of the archipelago. It is
understood that a resident is whose residence permit has been issued
by the respective departmental authority.
• For the application of this benefit it should be observed the provisions
of the Decree 2763 of 2012
APPLICABLE LABOR
INCENTIVES
JW Marriot Hotel - Bogotá

12. PROCOLOMBIA.CO INCENTIVES FOR DOING BUSINESS IN TOURISM AND HOTEL SECTOR 2322
New employees under 28 years old.
New employees in disability, displacement or
reintegrate situations.
New female employees up to 40 years old,
unemployed for more than 1 year.
Employees with less than 1.5 minimum legal
monthly wage.
It is a subsidy granted by the Government to companies legally constituted under
Colombian laws and with at least, one year of existence, which provide employment
for young people within 18 and 28 years old with no previous labor experience.
The subsidy is granted until six months provided that the company maintains the labor
contract with at least the 60% of the employees appointed for the vacant positions.
According to Law 391 of 1997, wages and social benefits that a company pays to
disabled employees may be deducted from income tax by 200%, provided they
meet the following requirements:
* The disability must consist of a limitation of not less than 25%, duly verified by
the Ministry of Labor.
* The limitation of the disability must remain during the term in which payments
of wages and social benefits are made.
* Employers are required to submit tax returns.
It is possible to discount from tax income, the payroll contributions and other
contributions derived from labor contracts:
5.1. INCOME TAX DEDUCTION FOR PAYROLL CONTRIBUTIONS, AND
OTHER CONTRIBUTIONS (LAW 1429 OF 2010)
5.2. INCENTIVE FOR THE FIRST JOB
5.2. DEDUCTION OF 200% OF THE INCOME TAX FOR LABOR PAYMENTS
TO DISABLED EMPLOYEES:
LEVEL OF EDUCATION
OF THE EMPLOYEE
SUBSIDY GRANTED TO THE
COMPANY FOR EACH EMPLOYEE
High school 1 SMLMV + transportation subsidy and social benefits
Technical professional COP$ 700.000 + transportation subsidy and social benefits
Technical COP$750.000 + transportation subsidy and social benefits
University COP$900.000 + transportation subsidy and social benefits

13. PROCOLOMBIA.CO24
Estructura organizacional de la compañía: número de trabajadores en
cargos de gerencia, administrativos y operarios;
Hojas de vida de los socios de la compañía;
La autorización de ensamble es emitida dentro de los 90 días después de la
presentación de la solicitud completa. La autorización inicial tiene una validez de
3 años14
.
3.5. ¿CUÁNDO PUEDO EXPORTAR O INGRESAR AL TERRITORIO
ADUANERO NACIONAL LOS BIENES TERMINADOS?
Una vez que los bienes han sido procesados o ensamblados, estos podrán ser
exportados o vendidos dentro del territorio nacional (mediante su importación
ordinaria).
PROCOLOMBIA.CO
Libertad y Orden