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The Eight fundamental aspects on labour and employment matters of the “Ley de Crecimiento Económico” (Law of Economic Growth)

1.Voluntary Contributions to Mandatory Individual Accounts

According to article 31 of Law 2010 of 2019, voluntary contributions to the Mandatory Individual Accounts of the system known as RAIS, will not be taken as income, as long as it does not exceed the limit of 25% of the employees anual income or the amount of 2500 UVTs. This, ratifies the explanation of the Colombian Tax Agency (DIAN) made by the Unified Concept 1912 of july 19th, 2019. Nevertheless if  the voluntary contributions are not used for a better pension, the contributions will be held as income and a 35% of the amount will be withold by the pension fund.

2.Electronic Legal Notice on administrative investigations from the UGPP

As provided by articles 103, 104 and 105 of the Law, legal notice on administrative investigations from the UGPP over social security contributions and contributions to SENA, ICBF and the Family Compensation Fund, will be due and preffered through data messages via e-mail. The notice will be taken as of the day the message was sent and if the content of the e-mail cannot be visualized, it is mandatory to advice the UGPP of said situation, in order for a new e-mail to be sent.

3.Settlement of Disputes with the UGPPP 3

Articles 118 and 119 of Law 2010 of 2019 allow the UGPP to settle the disputes over interests and sanctions of the administrative investigations of its competence. The settlement may forgive up to 100% of the interests and sanctions, but no settlement may be done over the interests on pension contributions. For these purposes, the system already provides the “Planilla O”. Likewise, the administrative acts that include sanctions and interests, may be revoked by the UGPP within the faculties granted by the Law of Economic Growth.

4.Economic Sanctions on the late provision of information to the UGPP

Sanctions on the late provision of information to the UGPP when the entity asks for inforation, will be up to 15000 UVTs according to the amount of months of delay on provisioning the complete information, as follows:

Months of Delay

 

UVT of Sanction

Hasta 130
Hasta 290
Hasta 3240
Hasta 4 450
Hasta 5750
Hasta 61200
Hasta 71950
Hasta 83150
Hasta 94800
Hasta 107200
Hasta 1110500
A partir de 1215000

 

Likewise, sanctions may be reduced by the UGPP, when the total information is given and depending on the income that the Company reports to the Colombian Tax Agency (DIAN) or the income determined by the UGPP when no declaration of tax is done by the enterprise. Nevertheless, decision on the diminishing of the sanction is at will from the UGPP.

5.Assumption of Expenses on Independent Workers

According to article 139 of the Law, the UGPP shall regulate a scheme to assume expenses of independent workers, in order for them to determine whether or not they have an obligation to pay contributions to social security. As ordered by the Law, UGPP issued Resolution 209 of 2020 which establishes the assumption of expenses on the different economic activities executed by independent workers.

6.Monthly contribution to the Health Insurance System by pensioners

As of 2020 the monthly contribution to the Health insurance system due by pensioners will be reduced, as follows:

Years 2020 and 2021:

Monthly IncomeContribution
1 Minimum Wage (MW)8%
1 to 2 MW 10%
2 to 5 MW12%
5 to 8 MW12%
More than 8 MW12%

 

2022 and following years:

Monthly IncomeContribution
1 Minimum Wage (MW)4%
1 to 2 MW 10%
2 to 5 MW12%
5 to 8 MW12%
More than 8 MW12%

 

7.Witholding Tax Rates

Witholding Tax Rates were updates by the Law as seen in the following chart:

Income in UVTs

Rate

Formula

From

Until

>0

95

0%

0

>95

150

19%

(Income in UVT -95UVT) * 19%

>150

360

28%

(Income in UVT -150UVT) * 28% + 10 UVT

>360

640

33%

(Income in UVT -360UVT) * 33% + 69UVT

>640

945

35%

(Income in UVT -640UVT) * 35% + 162UVT

>945

2300

37%

(Income in UVT -945UVT) * 37%+ 268 UVT

>2300

En adelante

39%

(Income in UVT -2300UVT) * 39% + 770 UVT

 

Authors

Adriana-Escobar-CMS-Colombia
Adriana Escobar
Partner
Bogotá
Ivan-Jimenez-CMS-Colombia
Iván Jiménez