All companies that belong to the Free Trade Zone Regime must have an authorized area so that they can carry out operations, however, the size of this is not something that is regulated, so it is common for companies to opt for smaller area taking advantage of the hybridity modality of teleworking which took more strength because of the pandemic.

This has made many companies choose to carry out the processes of area reduction, which can become a very complicated procedure since sometimes companies do not have all the necessary information mainly in terms of controls of all assets and improvements made to the property that had been acquired exempt from taxes, therefore, the most relevant elements to take into consideration are:

• Before requesting an area reduction, companies must be clear about how the assets were purchased and what they are going to do with these assets that are in the area to be reduced. The company may make donations or destructions in which it is not required to pay the taxes left unpaid at the time of acquisition; However, if the company intends to sell the assets or give them to somebody, it is necessary to pay the corresponding taxes.

To do the above, companies must identify if they were acquired abroad, since in this case the nationalization is done through a customs agency, and if they were purchased locally, the payment is made through an official payment receipt D-110.

• Within the most complicated are the improvements to the leased property, since the company must have a level of detail of the composition of materials of these improvements, this to be able to settle the taxes, but also in the case that materials were purchased locally, it will be necessary of an expert to validate the cost of these.

• Once the taxes have been settled, for those purchases that had been made locally, a validation process of taxes settled before the Tax Administration must be carried out, a procedure that is sometimes omitted, and that in the end can generate significant delays.

The process is complicated in many cases because companies do not have backup invoices or are not clear about the value on which to settle taxes, also detect assets that were not known to exist, or assets whose backup information is, but the physical asset does not appear. 

For all the above, there are procedures to follow, and therefore it is necessary that companies are well advised not only when performing the area reduction, but permanently to avoid having those complications at any time that require a specific process.

The content of this newsletter is merely informative, that´s why it cannot be used under any circumstances as advice on the matter described in it. If you need advice on any of the aspects discussed, our team of professionals will be willing to assist you. contacto@jadelrio.com