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Managing a business in Colombia can pose significant challenges, particularly if the managers/owners are unfamiliar with local legal, regulatory and accounting obligations. Our priority is to simplify the management of local businesses even as we help our clients keep their companies up to date with all applicable obligations.

 

ACCOUNTING SERVICES

Anyone who does business in Colombia knows the importance of having access to a top-notch accountant.  From bookkeeping and organizing monthly financials to filing taxes and coordinating with the DIAN (the local tax authority in Colombia), Colombian accountants are key members of your business team, particularly given the complexity of the local regulatory environment.

Langon  provides clients with comprehensive accounting services that include, but are not limited to:

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  • Book keeping:

Managing and updating financial transactions on a monthly, quarterly and annual basis.

  • Invoicing:

Issuing company invoices (including electronic invoices as required starting in 2020) consistent with local requirements.

  • Payroll:

Managing payroll (“nómina”) obligations consistent with local law.

  • Social Security:

Managing social security (“seguridad social”) obligations consistent with local law.

  • AP/AR:

Managing payment processing for vendors, relevant service providers as well as payments from clients.

  • Financial Statements:

Drafting and finalizing monthly, quarterly and annual financial statements as required by local law and/or internal company policies.

  • Tax Filings:

Drafting and finalizing annual company tax filings at the municipal, regional (“departamental”) and national level.

  • “IVA” Management:

Calculating local VAT tax obligations and determining whether your company qualifies for exemptions.

  • Tax Payments:

Calculating and paying applicable taxes including annual income tax (“declaración de renta”) obligations, the National Anticipatory Tax (“Autorenta”), the Industry and Commerce Tax (“Impuesto de Industria y Comercio”), and the Income Tax Surcharge (“Sobretasa Impuesto sobre la Renta para la Equidad”).

  • Tax ID Numbers:

Registering with the Colombian tax authorities in order to secure a Unique Tax Register number (“Registro Único Tributaro – RUT”), the company’s tax ID.

  • Invoice Resolutions:

Securing an Invoice (“Resolución de Facuración”) from the DIAN, allowing your company to issue invoices.

  • Corporate Auditors:

Providing auditor services if local law requires that your company appoint an auditor. 

 

HR/EMPLOYMENT LAW SERVICES

Beyond just hiring employees and independent contractors, local businesses will need a way to manage all applicable human resources/employment law obligations. Langon assists clients in managing all employee-related obligations in order to ensure compliance with local regulations, while minimizing overall risk to their businesses.

Our Employment Law Practice Group provides comprehensive assistance in the following areas of law:

  • Employee Rules and Policies:

Drafting legal documents outlining policies impacting employees including company employee policies (“políticas empresariales”), Employee Handbooks (the so-called “Reglamento Interno de Trabajo”) as well as applicable corporate documentation.

  • Internal Compliance:

Monitoring compliance with internal company policies, Employee Handbooks (“Reglamento Interno de Trabajo”), Employment Contracts (“Contratos Laborales”), Independent Contractor Contracts (“Contratos de Prestación de Servicio”), Confidentiality Agreements (“Acuerdos de Confidencialidad”), IP Employee Handbooks (“Manuales de Propiedad Industrial Para Empleados”) and other legal documents.

  • Legal Compliance:

Providing ongoing advice and assistance regarding applicable employment laws and regulations and how they impact local operations.

  • Hiring Employees:

Providing ongoing advice and assistance as new employees are hired.

  • Terminating Employees:

Managing the process of terminating employees pursuant to local law.

  • Benefits:

Providing ongoing advice and assistance in connection with the management and implementation of benefit plans consistent with applicable law.

ONGOING LEGAL SERVICES

In addition to accounting and HR services your company will need ongoing legal assistance during a typical fiscal year. Assistance may include:

  • Annual Business License Renewal:

Renewing your business license with your local Chamber of Commerce on an annual basis but no later than March 31 of every year.

  • Industry-Specific Permits/Licenses:

Update, renew or otherwise amend your permits/licenses in order to remain current with local obligations depending on the industry involved.

  • Declaration Forms for International Transfers:

Drafting and executing relevant documentation (the so-called, “formularios”) that allows financial institutions to “nationalize” funds transferred into Colombia in order to capitalize your local company or because local company is receiving funds from clients based abroad.

  • Declaration Form No.15:

Drafting, finalizing and submitting annual certifications if your local company receives foreign investment.

  • Annual “Superintendencia” Obligations:

Drafting, finalizing and submitting relevant reports to the “Superintendencia de Sociedades” (the equivalent of the Securities and Exchange Commission for business entities in the United States or the Financial Conduct Authority in the UK) if required (“Resolución de Facuración”) from the DIAN, allowing your company to issue invoices.

Learning Center

A summary of the most important tax obligations your business will face in Colombia

Corporate Income Tax (“Renta”)

As of 2020, Colombia assesses a corporate income tax of 32%. The corporate tax rate will decrease 1% each year and by 2022 it will be 30%.

Value Added Tax (“IVA”)

IVA is imposed on imports as well as the sale of goods and the provision of services. Prior to 2017, the standard IVA rate was 16%, with lower rates of 5% and 0% applicable in certain cases. Certain goods and services are exempt or zero-rated. Since January 2017 IVA is now 19%. IVA is generally paid every month and every two or four months, depending on the company’s gross income the previous year.

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National Anticipatory Tax (“Autorenta”)

This is a monthly national tax on companies equal 0.4% to 0.8% which is a type of anticipated tax that can be discounted from the corporate income tax payment your company will pay when it files corporate taxes. Similar to the legacy CREE tax, it is assessed on company profits annually.

Industry and Commerce Tax (“Impuesto de Industria y Comercio – ICA”)

Local municipal tax that is assessed on revenue generated from industrial, commercial or service activities. Total payment due varies based on location of business and may be assessed bimonthly or annually.

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Withholding Tax (“Retefuente”)

Your company may be required to withhold payments on any number of tax obligations. The most common withholding tax is for professional fees and services rendered. Taxes range from 4% and 6% for services and 10% and 11% for professional fees.

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Corporate Income Tax (“Renta”)

As of 2020, Colombia assesses a corporate income tax of 32%. The corporate tax rate will decrease 1% each year and by 2022 it will be 30%.

Value Added Tax (“IVA”)

IVA is imposed on imports as well as the sale of goods and the provision of services. Prior to 2017, the standard IVA rate was 16%, with lower rates of 5% and 0% applicable in certain cases. Certain goods and services are exempt or zero-rated. Since January 2017 IVA is now 19%. IVA is generally paid every month and every two or four months, depending on the company’s gross income the previous year.

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National Anticipatory Tax (“Autorenta”)

This is a monthly national tax on companies equal 0.4% to 0.8% which is a type of anticipated tax that can be discounted from the corporate income tax payment your company will pay when it files corporate taxes. Similar to the legacy CREE tax, it is assessed on company profits annually.

Industry and Commerce Tax (“Impuesto de Industria y Comercio – ICA”)

Local municipal tax that is assessed on revenue generated from industrial, commercial or service activities. Total payment due varies based on location of business and may be assessed bimonthly or annually.

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Withholding Tax (“Retefuente”)

Your company may be required to withhold payments on any number of tax obligations. The most common withholding tax is for professional fees and services rendered. Taxes range from 4% and 6% for services and 10% and 11% for professional fees.

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Learning Center

Learning Center

A summary of the most important employment obligations your business will face in Colombia

Severance Assistance (“Cesantías”)

(Art 249 a 258; Ley 50 de 1990; Decreto 2076 de 1967). Companies are required to pay the equivalent of one month’s salary for each full year of employment. Severance Assistance is calculated as of the end of the calendar year or at the end/termination of the employment agreement. Payment is made directly into a government fund selected by the employee (though can be paid directly to an employee in certain circumstances). Payment must be made no later than February 14 of the following year. Pro rata payments apply if employee works only part of the year.

Interest on Severance Assistance (“Intereses Sobre las Cesantías”)

(Ley 52 de 1975; Decreto Reglamentario 116 de 1976). Companies are required to pay employees an interest payment equal to 12% of the “Cesantías” that are payable to each employee on an annual basis. Interest on Severance Assistance is calculated as of the end of the calendar year or at the end/termination of employment agreement. Payment is made directly to employee. Payment must be made no later than January 31 of the following year or on the date employment agreement ends/is terminated. Pro rata payments apply if employee works only part of the year.

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Salary Bonus (“Prima”)

(Código Sustantivo del Trabajo: Art 306-308). Companies are required to pay the equivalent of one month’s salary for each full year of employment. Salary Bonuses are calculated as of the end of the calendar year or at the end/termination of the employment agreement. Payment is made directly to employee. Payment is made biannually (first 20 days of June and first 20 days of December). Pro rata payments apply if employee works only part of the year.

Social Security (Health Care)

(Ley 100 de 1993; Ley 1122 de 2007). Corresponds to 12.5% on the salary earned for the employee. Employees contribute 4% and companies contribute 8.5%. Payments are made monthly.

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Social Security (Pension)

(Ley 797 de 2003). Corresponds to 16% of salary. Employees contribute 4% and companies contribute 12%. Payments are made monthly.

Social Security (Occupational Risk)

(Ley 1562 de 2012). Contributions range from 0.348% to 8.7% depending on activity. Payments are made monthly.

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Vacation (“vacaciones”)

(Código Sustantivo del Trabajo: Art 186-192). Companies are required to grant 15 business days of paid vacation per year for any employee that has worked at least 1 year. Vacations are granted every year an employee works for the company. Companies and employees can decide to have the Company pay employee up to half of their vacation days in order to shorten accrued vacation days. Companies cannot pay out the entirety of vacation days to employee but can advance vacation days to employee.

Transportation Assistance (“Auxilio de Transporte”)

(Ley 15 de 1959; Decreto 1258 de 1959). Companies are required to pay transportation costs for certain qualified employees. Transportation Assistance is paid monthly. Applicable to employees earning up to twice the minimum legal salary.

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Clothing “Gift” Assistance (“Suministro de Calzado y Vestido de Labor”)

(Código Sustantivo del Trabajo: Art 230 a 235; Ley 11 de 1984). Companies are required to “gift” certain clothing items to qualified employees including a pair of shoes and work-related clothing. The Clothing “Gift” Assistance is made/paid directly to employee. Clothing “Gift” Assistance is provided three times a year (April 30, August 31, December 20). Applies to employees earning up to twice the minimum legal salary who have worked at least 3 months with the Company. Companies may not pay the value of the Clothing “Gift” Assistance to employees.

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Severance Assistance (“Cesantías”)

(Art 249 a 258; Ley 50 de 1990; Decreto 2076 de 1967). Companies are required to pay the equivalent of one month’s salary for each full year of employment. Severance Assistance is calculated as of the end of the calendar year or at the end/termination of the employment agreement. Payment is made directly into a government fund selected by the employee (though can be paid directly to an employee in certain circumstances). Payment must be made no later than February 14 of the following year. Pro rata payments apply if employee works only part of the year.

Interest on Severance Assistance (“Intereses Sobre las Cesantías”)

(Ley 52 de 1975; Decreto Reglamentario 116 de 1976). Companies are required to pay employees an interest payment equal to 12% of the “Cesantías” that are payable to each employee on an annual basis. Interest on Severance Assistance is calculated as of the end of the calendar year or at the end/termination of employment agreement. Payment is made directly to employee. Payment must be made no later than January 31 of the following year or on the date employment agreement ends/is terminated. Pro rata payments apply if employee works only part of the year.

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Salary Bonus (“Prima”)

(Código Sustantivo del Trabajo: Art 306-308). Companies are required to pay the equivalent of one month’s salary for each full year of employment. Salary Bonuses are calculated as of the end of the calendar year or at the end/termination of the employment agreement. Payment is made directly to employee. Payment is made biannually (first 20 days of June and first 20 days of December). Pro rata payments apply if employee works only part of the year.

Social Security (Health Care)

(Ley 100 de 1993; Ley 1122 de 2007). Corresponds to 12.5% on the salary earned for the employee. Employees contribute 4% and companies contribute 8.5%. Payments are made monthly.

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Social Security (Pension)

(Ley 797 de 2003). Corresponds to 16% of salary. Employees contribute 4% and companies contribute 12%. Payments are made monthly.

Social Security (Occupational Risk)

(Ley 1562 de 2012). Contributions range from 0.348% to 8.7% depending on activity. Payments are made monthly.

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Vacation (“vacaciones”)

(Código Sustantivo del Trabajo: Art 186-192). Companies are required to grant 15 business days of paid vacation per year for any employee that has worked at least 1 year. Vacations are granted every year an employee works for the company. Companies and employees can decide to have the Company pay employee up to half of their vacation days in order to shorten accrued vacation days. Companies cannot pay out the entirety of vacation days to employee but can advance vacation days to employee.

Transportation Assistance (“Auxilio de Transporte”)

(Ley 15 de 1959; Decreto 1258 de 1959). Companies are required to pay transportation costs for certain qualified employees. Transportation Assistance is paid monthly. Applicable to employees earning up to twice the minimum legal salary.

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Clothing “Gift” Assistance (“Suministro de Calzado y Vestido de Labor”)

(Código Sustantivo del Trabajo: Art 230 a 235; Ley 11 de 1984). Companies are required to “gift” certain clothing items to qualified employees including a pair of shoes and work-related clothing. The Clothing “Gift” Assistance is made/paid directly to employee. Clothing “Gift” Assistance is provided three times a year (April 30, August 31, December 20). Applies to employees earning up to twice the minimum legal salary who have worked at least 3 months with the Company. Companies may not pay the value of the Clothing “Gift” Assistance to employees.

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