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19 January 2023
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Payroll compliance in Colombia

Colombia is one of the most attractive jurisdictions for doing business in Latin America, with a strong governmental commitment to building a culture of compliance, especially when it comes to payroll-related issues.

Colombia’s Labour Code applies to all employees in the country, regardless of their nationality. It covers all aspects of employment, including the form and duration of employment contracts, probation periods, minimum wage levels, working hours, holidays and leave, termination of employment and collective bargaining.

Social benefits are a key pillar of labour laws in Colombia, and employers are required by law to pay these benefits in addition to regular salary.

  • In 2007, Colombia created a new administrative body, called the Unidad de Gestión Pensional y Parafiscales de la Protección Social (UGPP), to ensure the correct payment of pension and social security contributions. The UGPP ensures that employers and self-employed workers correctly calculate and pay contributions, and has the power to force payment of what is due, as well as to impose sanctions, including default interest.
  • In 2021, Colombia’s tax authority (the DIAN) mandated electronic payroll submissions and electronic payment functionality. Monthly submission of electronic payroll reports to the DIAN is now obligatory for all companies.
  • Colombia labour law mandates that employers must pay employees a ‘13th month’ salary. The first half of this must be paid within the first 15 days of June and the second half within the first 20 days of December.

If you’re doing business in Colombia and are looking to learn more about Colombia’s labour laws, incorporation procedures, tax implications and compliance requirements, request a copy of our full country profile, Doing business in Colombia.

Payroll compliance guide

The global payroll compliance landscape can be a difficult one to navigate and interpret. Overseas businesses can be subject to greater scrutiny on the part of local governments, regulators and tax authorities.

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