Managing payroll and compliance in Colombia can be challenging – especially with labor laws, taxes, and payroll changes each year. Blue Marble helps companies operating in Colombia or starting a business there with our technology and in-country expertise to ensure compliance.
Many businesses choose to expand into Colombia by incorporation instead of opening a branch office. A Simplified Share Company (SAS) is an easy to establish choice for many companies. The corporate tax rate is 33%, and the tax year follows the calendar year from January 1 – December 31st. Foreign-owned companies are only taxed on Colombian-generated income, but tax reform in 2019 has required private equity firms to be taxed on global income earnings. Deadlines to file taxes are set yearly and depend on the type of taxpayer and tax ID number, but deadlines usually fall between April and May.
Payroll and Labor Considerations
Employees can be hired for indefinite, fixed, or project-based contracts, and must receive pay monthly or every 2 weeks. Collective Bargaining Agreements are formed company-wide, but only 4% of the labor force in Colombia uses collective bargaining. If more than 33% of the company employees belong to a trade union, the collective bargaining agreement of the union protects every employee of the company.
As of December 2017, foreign workers require a M-5 visa to work, and provide a variety of employment documents including work contracts, bank statements, and more. In 2018, Colombia created the Unique Registry of Foreign Workers in Colombia (RUTEC) to help track labor immigration. The database must be used for all companies hiring foreign employees. Reporting to the Foreigner Information and Reporting System (SIRE) is also required.
New changes each year bring new challenges for payroll compliance in Colombia. Blue Marble provides a unique combination of local, in-country knowledge and a US-based team to help when questions come up. Let us help you simplify payroll and compliance in Colombia – click here to learn more.