Through the Decree 474 of 2020, the Ministry of Culture regulates Article 178 of Law 1955, 2019 (National Development Plan 2018-2022) regarding the issuance of Audiovisual Investment Certificates in Colombia (the “Certificates”).
The Certificates are tradable securities issued by the Ministry of Culture to producers that develop audiovisual compositions within the territory and that are not required to file an income tax return in Colombia. The Certificates will amount up to 35% of the investment and can be used as tax credit for income tax purposes. Income earned by the producer from the sale of such Certificates is not taxable nor subject to withholding tax.
Accordingly, Decree 474 of 2020 establishes the following requirements for the foreign producer to opt for the Certificate. These conditions are:
- The investment was made on the hiring of Colombian individuals or legal entities.
- The involvement of a company providing film services in Colombia or a local co-producer
- The expenditure in Colombia covered by the Certificates is to contract Colombian individuals or legal entities that provide audiovisual services necessary for the various stages of realization, production or post-production, including hotel, food and transportation services for the respective work.
- The film owner or producer has fully guaranteed the rights and social benefits provided in Colombian law to the personnel hired, attaching the relevant supporting documentation.
- Certify under oath that no consideration was received from the Colombian Film Fund nor any of the benefits set forth in the Film Law.
- Demonstrate that it is a production company for the audiovisual project.
- That the producer is not obliged to file income tax returns by submitting a certification under oath. This will be confirmed with the Tax Office.
The audiovisual project must be submitted for approval to the Colombian Film Promotion Committee through its Technical Secretariat. The Certificate will be issued if the producer complies with the minimum amounts set forth in Decree 474, 2020 and the Resource Allocation Manual.
To apply for the Certificate, the production company may grant power of attorney to the Colombian co-producer or to the film service company.
Decree 474, 2020 clarifies that the investment eligible for the Certificate must meet the following criteria:
- The investment for the acquisition of cinematographic or audiovisual services in Colombia will be made in cash and may not be less than the minimum determined by the Colombian Film Promotion Committee
- The investment must be made in the same manner as that set for the consideration of the Colombian Film Fund, established in Law 1556 of 2012, regarding trust management requirements.
- The project must have a registered Film Service Company as defined in Law 1556 of 2012 or, alternatively, a co-producer that is a Colombian legal entity engaged in audiovisual activities or a Colombian film company in the case of film projects.
- The project cannot take more than 4 years to make the investment or expenditure, beginning from the date of approval by the Committee.
- Certificates of Audiovisual Investment in Colombia cover the investment or expenditure actually made and certified in the corresponding fiscal year, provided the minimum investment set for each type of project by the Colombian Film Promotion Committee has been met.
- The production company that owns the project or its agent must sign a Filming Colombia Contract under the parameters defined in the Resource Allocation Manual.
It should be noted that audiovisual projects may result in the issuance of one or more Certificates. The certificates may be issued and circulated in a dematerialized manner. In that case, a contract will be executed with the Colombian Central Securities Deposit for their negotiation. The Ministry of Culture will regulate this matter.
Likewise, the Decree provides that the Certificates will have a maximum validity of 2 years as of their effective issuance or book entry, but in any case, they may be fractioned and partially used before their expiration.
The Tax Office is the entity in charge of enforcing and auditing the producer’s compliance of the Statutes and regulations.