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Colombia is one of the nations with various taxes with very high rates, a situation that disadvantages national and foreign investment, generating a negative effect due to the growth of unemployment and informality. The state identified unemployment and informality rates, among these is the city of Armenia, with the aim of encouraging investment in the country and counteracting social problems, they have led projects and tax benefit laws that help mitigate social problems with formal jobs; one of these Law 1955 of 2019 Special Economic and Social Zones (Zese) that offers discounts on income tax to new or existing companies that generate new jobs as long as they comply with the parameters of this. [ABSTRACT FROM AUTHOR]

This paper analyses the tax income consequences for the government of creating a tax reduction system based on investments. This type of policy is usually applied with a view to improving the general conditions of the economy, or as a model of investment for the future, but the net effect on tax collection for the government depends on the performance of businesses benefiting from the deductions. This investigation used economic, mathematical, statistical and dynamic tools to describe the optimization problems for businesses and the government (related to fiscal problems) within a neo-classical framework. The practical application is related to Colombia, and uses a calibration of the author's proposed variables. The paper concludes that it is convenient to apply this instrument, given the need to accelerate economic growth and solve a difficult fiscal situation at the same time. Furthermore, it establishes that tax benefits are unlikely to generate excessive levels of investment that would reduce tax collection at current values. However, measures may need to be introduced to control how benefits are granted and avoid opportunistic behavior. [ABSTRACT FROM AUTHOR]