On 4 August 2021 a new maritime law that includes changes relevant to registering ships under the Colombian flag was issued. Although there are competitive registries in the region, Colombia is aiming to make its flag more attractive so that more shipowners will pick Colombia when choosing where to register a vessel in South America.
One of the most salient features of the new law is that a public deed will no longer be required in vessel sales. Although this requirement will remain for vessel mortgages, it seems that needing only a private document in a sale transaction is still an advantageous simplification of the local registration procedure.
The elimination of the old-fashioned requirement of an anti-drug trafficking report certificate is another welcome change. This certificate, which was previously required for definitive ship registration, was one of the most complicated elements of the registration process. Its elimination under the new law will undoubtedly help to save time.
Another important modification that the new law has made is the substantial reduction of income tax accrued by Colombian-flagged vessels that provide international maritime transport services. Before the law was enacted, said service had no special treatment and thus the applicable tariff was the regular tariff (which was 31% in 2021). The new law provides that this tax is substantially reduced to just 2%, which is close to a complete tax exception for incomes generated by national vessels dedicated to international services.
In addition, Colombia will no longer require the cancellation of any previous registration under the Colombian flag if the vessel is being sold. This will help with the change of ownership procedure since, as per article 21 of the new law, the buyer now only needs to present the bill of sale and request the change of registration so that it is under their name and not the previous owner's name.
Although the new law has not resolved all of the key issues at hand, the value-added tax situation in particular, it has addressed some of the day-to-day issues, which will at least make it simpler for those that need to register a vessel in Colombia.
For further information on this topic please contact Javier Franco at Franco & Abogados Asociados by telephone (+57 1703 5633) or email ([email protected]). The Franco & Abogados Asociados website can be accessed at www.francoabogados.com.co.