Law 1819/2016 on tax deductions for renewables and carbon tax, regulated partially by Decree 926/2017 and last amended by Law 2169/2021

Article 235-2 of the law deals with tax exemptions from January 10th, 2018, onward. Legal exceptions referred to in article 26 of the Tax Statute include (paragraph 7) the sale of electric power generated based on wind energy, biomass or agricultural waste, solar, geothermal or seas, according to the definitions of Law 1715 of 2014 and Decree 2755 of 2003, made only by generating companies, for a term of fifteen years, from the year 2017, provided that the following requirements are met: a) Process, obtain and sell certificates of emission of carbon dioxide in accordance with the terms of the Kyoto protocol; b) That at least 50% of the resources obtained from the sale of said certificates be invested in works of social benefit in the region where the generator operates. The investment that entitles the benefit will be made according to the proportion of each municipality affected by the construction and operation of the generating plant. Part nine of the law (articles 221 to 223) also institutes a national carbon tax. This was added by Decree 1625 /2016. Then, Decree 926/2017 regulated the procedure to certify being carbon neutral, in accordance with the provisions of paragraph 3 of article 221.The Law 2169/2021 amended this piece of legislation by stating the specific allocation of the National Carbon Tax (from fiscal year 2023 onward). The amendment outlined that 50% of the revenue will be allocated to mitigation and adaptation practices, such as coastal erosion management, reducing and monitoring deforestation, protection, preservation, restoration, and sustainable use of strategic areas and ecosystems, particularly páramos (high-altitude ecosystems), Payment for Environmental Services (PES), and funding measures for climate action as defined in the law and in Colombia's Nationally Determined Contribution (NDC) to the UNFCCC. Moreover, also stated that 50% of the revenue will go towards financing the National Integral Program for the Substitution of Illicit Crops (PNIS).