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Mercans CountryIntel ® Colombia Payroll And HR Insights

Mercans offers complete payroll, PEO and HR services in Colombia

Colombia stands out amongst other regional economies for its macroeconomic strength, fiscal policies, legal security and investment guarantees. Colombia also has an extensive free trade agreement network, which secures preferential access to over 60 countries.

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Doing Business in Colombia

Companies who choose to do business in Colombia should take note of several incentives offered to encourage foreign investment. This includes the free trade zone regime, the Vallejo Plan, customs duty reductions or exemptions, VAT exclusions for imported equipment and incentives for science technology and innovation. Further, there are incentives for several economic sectors including agriculture, tourtism, the creative economy and the automotive industry, among others.

Entity Registration and Incorporation Requirements

Setting up a new business or expanding an existing one in Colombia is straightforward. Choose how your company operates from a range of entity types which suit your individual circumstance.

Banking

Banking Hours: Monday to Friday from 8:00 am - 4:30 pm

Working Week

The standard working week is from Monday to Friday from 9:00 am-6:00 pm

Labor Law

All employment contracts are governed by Colombian labor law, regardless of the parties’ nationalities. Additionally, employment contracts with foreign nationals must be reported to Migracion Colombia via SIRE (the Information System for Reporting Foreign Nationals).

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Main Industries

Mining (coal, gold, and emeralds), oil, textiles and clothing, agribusiness (cut flowers, bananas, sugarcane, and coffee)

GDP Growth

13.20

Dates & Numbers

dd/mm/yyyy

Official State Name

Republic of Colombia

Population

50.88 million

Capital

Bogota

Major Languages

Spanish

Currency

Colombian Peso COP

Internet Domain

.co

International Dialing Code

+57

Colombia
Bogota, CO
4:44 am, December 2, 2022
10°C
broken clouds

Payroll

Companies who maintain a presence in many countries and which operate a multi-country payroll should take note that Colombia’s monthly legal minimum wage is established every year.

It is acceptable to provide employees with online payslips

Payslip

Payroll reports must be kept for 20 years

Reports

15 days paid leave

Annual Leave

All employees are entitled to paid sick leave for the first two days of leave, at a rate of two-thirds of their regular pay rate

Sick Leave

18 weeks of paid maternity leave and 8 days of paid paternity leave

Maternity & Paternity Leave

10 days

Employee Termination

The employer must pay the first half of this salary within the first 15 days of June and the second half of it within the first 20 days of December

13th month salary

908.526 COP per month

Minimum Wage

An employee who has to work between 10 pm and 6 am must be paid 35% more than the equivalent daytime salary

Overtime

30 days for the first year of employment, plus 20 days for each additional year of service.

Severance Pay

Tax and Social Security

There are no local taxes on individual income in Colombia. All employees whose work contract is governed by Colombian labor regulations must be affiliated to the social security system which includes the general pension system, the health social security system and the general system of professional risks.

Tax

There are a few types of income included in the general income basket to which personal income tax rates apply. This includes employment income, capital income and non-employment income. There are progressive rates that apply to fiscal residents (whether national or foreign) applicable to the general income basket.

31%

Corporate Income Tax

39%

Personal Income Tax

19%

Sales Tax

19%

VAT

Social Security

Employers are obligated to pay social benefits (unemployment benefits, service bonuses) and make pension, healthcare and occupational risk contributions to the Comprehensive Social Security System.

30.5%

Social Security Rate

20.5%

Social Security Rate for Employers

10.0%

Social Security Rate for Employees

Employment Law

Colombian labor law stipulates four forms of employment contract which are defined by duration: indefinite term, fixed term, work (or labor) and occasional.

Employment Agreement

Recent regulations take into account the changes wrought by the pandemic including Act 2088 on Work at Home and Act 2121 on Remote Work. Additionally, Act 2101 of 2021 shortens the working day which should be gradually implemented from 48 hours of work per week to 42 hours over the course of five years.

Working condition

Although Colombian labor law sets the maximum ordinary working hours, it does allow for the agreement of flexible working days that adapt to worker needs. Equal opportunities are guaranteed for both national and foreign workers.

Leaves

Sundays and national holidays are mandatory rest periods and public holiday entitlements are in addition to annual leave.

Employment termination

Either party can terminate the labor agreement unilaterally, without cause and prior notice. However, the terminating party is responsible for indemnifying the damage suffered. Severance payments are structured and depend on whether the contract is fixed-term, for the duration of the performance of the work or for an indefinite term.

10 days

Minimum notice period for terminating an employee

20

Total number of Public Holidays

40

Working hours per week

8 days

Total number of days for Compassionate & Bereavement Leave

Immigration

Colombia has several work visa options to select from. The Business Owner Visa provides a permit for three years. The five most popular visas are the Pension Visa, Property/Investment Visa, Marriage or Civil Union Visa, the Business Owner Visa and the Student Visa.

Residency permits

The temporary work visa is typically issued for one or two years and presents an alternative to the migrant work visa. The Colombian Ministry of Foreign Relations makes changes to rules and regulations to work visas regularly.

Work Permit validity

Five years

Required Documents

Valid passport with a minimum of 180 days validity and two blank pages

Photocopy of the last page of the passport (personal details) and photocopy of the last entry/exit stamp to Colombia and any previous visas (where applicable)

Three 3cm x 3cm recent photographs taken with a white background

Work contract or signed and notarised contract of employment summary form (available online)

Proof of qualifications required to do the job (for example, a degree certificate translated into Spanish with an apostille affixed to it)

Employer details including registered company name, previous income tax return, tax identification number (NIT), legal representation, copies of bank statements over the last six months supporting a minimum average balance equating to 100 months minimum wage in Colombia (approximately US$32,000)

Further information on the documents required is available in Spanish from the Colombian government portal.

Compliant, reliable, error-free and touchless payroll in Colombia

Build the best team and hire top talent compliantly in Colombia. Get in touch with Colombia payroll outsourcing & PEO specialists for a free consultation!

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This document was prepared for informational purposes only. As local laws & regulations keeps on changing. Please consult your tax & legal advisors as well.
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