Colombia, COVID and economic reactivation
The Colombian government issued Decree 580 of 2021 which extended the “selective isolation” measures until September 1. However, the Decree seeks that mayors and governors establish measures that encourage a safe economic reactivation during the pandemic, allowing a gradual recovery for the business sector.
Decree 580 also seeks that when closure of economic activity is being considered by mayors due to an increase in COVID-19 cases, a favorable concept from the Health Ministry and the approval of the Interior Ministry will be required. This measure aims to prevent untimely closures of business activities, and harm to the economic sector.
With the moderation in closures and limitations of economic activities the government aims to stimulate business recovery, however, these measures are not enough on their own to foment reactivation to 100%. That is why the government has proposed additional measures like: (i) guaranteed credit lines, (ii) postponement of tax obligations, and (iii) strategies to encourage investment. These benefits will be available to all companies, but specially to micro and small companies due to the financial complications that these types of businesses have experienced during the pandemic.
Regarding credit lines, the Ministry of Commerce along with Bancoldex are looking to implement three credit line programs whose sum would be up to 700 billion COP. This sum will be split into: 200 billion COP directed to reinforce small and micro companies credit lines, 100 billion COP to support micro companies, entrepreneurs, and independent workers for investment, and 400 billion that will be focused on the rediscount line for all companies that have acquired debt due to the pandemic.
The National System of Agricultural Credit will have 15 billion COP available for investment or portfolio normalization. Likewise, the National Fund of Guarantees is setting up guaranteed credit lines, through its program “United for Colombia”, to micro financial companies and independent workers who are already part of their program.
Other support measures consist of: (i) the delay of the income tax fee of 2020 for small and micro companies, the first fee will be delayed by two months and the second fee will be delayed by five months from its original due date, (ii) the tax rate for advanced payment for taxable year 2021 is set at 0%, (iii) the “Reactivatech” initiative which seeks to reinforce businesses, knowledge, and digital tools for entrepreneurs and, (iv) strategies of remission of current and moratorium interests, to bring relief to debtors.
If you wish to know how to apply to any of these incentives or strategies of economic reactivation, BéndiksenLaw can guide you.
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