The tax benefits your company can receive for managing energy projects

We tell you about the tax benefits you can obtain by carrying out alternative energy projects or implementing efficient energy management plans in your processes.

Published on 18 December 2019

The tax benefits your company can receive for managing energy projects

Previously, we have talked about the benefits that renewable energies have for your business, including the efficiencies reflected in your energy bill, the possibility of generating additional income through the sale of energy surpluses generated, and supporting the fight against climate change by reducing the carbon footprint of your company.

But beyond all these advantages, you should know that in Colombia there is a growing focus on companies that invest in unconventional energy sources and those that establish efficient energy consumption plans, as seen through the granting of a series of tax benefits.

What are these energy projects?

According to law 1715 of 2014 there are 3 types of energy sources: conventional ones, such as coal and hydrocarbons. Unconventional sources of energy (FNCE), which include all those environmentally resources available but not as widely commercialized, such as atomic or nuclear. And the unconventional sources of renewable energy (FNCER) composed of renewable resources such as biomass (degradation of organic matter), wind, geothermal, solar, and others.

Both FNCE and FNCER projects can have tax benefits, however the third alternative is energy efficiency, which is basically the relationship between the energy actually used and the total energy employed in any process of the energy chain. This can be achieved through good technology conversion practices, such as the implementation of LED luminaires and automatic shutdown systems, or the replacement of fuels with cleaner ones.

Tax benefits for environmentally responsible companies

The most interesting benefits are a 50% income tax deduction on the total investment of your project. However, in this case it cannot exceed 50% of the liquid income of that statement, although your company could be given 15 years to make that deduction.

You could also exclude VAT on all equipment, machinery and services required to build your energy project. And even get an import tariff exemption. But it only applies to products that are not manufactured in Colombia.

In addition, your company would have the right to bring all necessary machinery, equipment and civil works to an accelerated fiscal depreciation of 5 years. That is, the accounting depreciation would be applied according to the reality of the equipment, but fiscally it will have the depreciation of 5 years.

How can you access these benefits?

Depending on the type of tax benefit you want to access, you will need certain requirements, for example, if you are going to access only the income tax benefit, you only have to submit your project to the Energy Mining Planning Unit (UPME). This is the entity that keeps track of all FNCER projects in Colombia. When accessing this benefit, you automatically apply for accelerated depreciation.

If you are interested in the VAT and import tariff benefits, you must take the certificate issued by UPME and submit it to the National Environmental Licensing Authority (ANLA), file the application and the certificate of initiation. They take 10 business days to request additional information on the project and in 25 business days they inform you of the acceptance or rejection of the project. Finally they issue the certification with which you can be VAT and tariff exempted.

It is important that you remember that the UPME and ANLA procedures can both take up to 6 months. Now, if during this process you change equipment suppliers and even brands, you must submit the changes to the ANLA and within a month, the agency issues the corrections.

However, the quantities cannot be changed and in case you need more equipment you will have to start the whole process again. Therefore we advise that when you file your application you include extended quantities of equipment. That is, if you need 10 solar panels, in your application you should put 15, in this way you will have greater room for maneuverability.

Less expenses, more benefits

As you can see, although technology has made it easier to produce energy from renewable sources, in order to access tax benefits, you still need to go through a rigorous planning process.

So if you intend to enjoy the advantages of a clean energy production system and implement efficient resource consumption, at Enel X we can provide you with the support you need to achieve this.


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