The standard “Works for Taxes” mechanism allows large income tax payers to finance projects in Areas Most Affected by Armed Conflict (ZOMAC) or Territorially Focused Development Programs (PDET). However, its implementation involves validation, registration, trust, and approval processes that can take months. The Decree creates a parallel emergency pathway with three structural changes: (i) it expands the pool of eligible taxpayers beyond the standard categories; (ii) it simplifies and accelerates the procedures for approval, structuring, and execution; and (iii) it extends the mechanism to projects directly linked to reconstruction in the designated territories, without requiring that they coincide with traditional ZOMAC or PDET zones. Projects “financed through this special mechanism may include investments directly related to the response, recovery, rehabilitation, reconstruction, replacement, reinforcement, or improvement of infrastructure and assets directly affected, in the following sectors and areas: Social housing and priority housing; Public education and public educational infrastructure; Public health and public health infrastructure; Drinking water and basic sanitation; Energy and public utilities associated with recovery; Road infrastructure, bridges, airports, transportation, and connectivity; Information and communications technologies and other infrastructure necessary to restore essential services; Rural public assets and productive infrastructure; Sports infrastructure; Disaster risk management. The Decree opens a concrete window of opportunity for companies with income tax obligations to convert a tax burden into territorial investment with direct impact, corporate visibility, and fulfillment of environmental, social, and governance commitments—all under an emergency regime that is more streamlined than the ordinary one. However, properly structuring the mechanism requires simultaneous mastery of tax law, public contract law, procurement and trust regulations, and the specific provisions of the emergency regime. An error in structuring could result in the tax benefit being disallowed, contractual liability, or regulatory noncompliance. Our team can assist you with feasibility assessments, project structuring, negotiations with public entities, and the management of associated tax and contractual risks.
