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Colombia, formally the Republic of Colombia, is a South American republic with a North American insular area. It is bounded to the north by the Caribbean Sea, to the east by Venezuela, to the southeast by Brazil, to the south by Ecuador and Peru, to the west by the Pacific Ocean, and to the northwest by Panama. Colombia is divided into 32 departments, as well as the Capital District of Bogotá, the country's biggest city. It has a population of 50 million people and an area of 1,141,748 square kilometers (440,831 square miles). Colombia's diverse cultural legacy reflects influences from numerous Amerindian civilizations, European settlement, African slaves, and European and Middle Eastern immigration. Spanish is the official language of the country, however, over 70 other languages are spoken.
Colombia has been inhabited by indigenous peoples such as the Muisca, Quimbaya, and Tairona since at least 12,000 BCE. The Spanish arrived in La Guajira in 1499 and colonized sections of the area by the mid-16th century, creating the New Kingdom of Granada with Santa Fé de Bogotá as its capital. In 1819, what is now Colombia gained independence from the Spanish Empire as the United Provinces of New Granada. Before declaring the Republic of Colombia in 1886, the new country experimented with federalism as the Granadine Confederation (1858) and subsequently the United States of Colombia (1863). Panama seceded in 1903, establishing Colombia's current boundaries. Since the 1960s, the nation has been plagued by an asymmetric low-intensity military war and political violence, both of which erupted in the 1990s. Security, stability, and the rule of law have improved significantly since 2005, as has exceptional economic growth and development.
Colombia is one of the world's seventeen megadiverse nations, with the world's second-highest degree of biodiversity. Its landmass includes the Amazon rainforest, hills, plains, and deserts. It is the only South American nation having coasts and islands on both the Atlantic and Pacific seas.
Colombia is a member of important global and regional organizations such as the United Nations, World Trade Organization, OECD, Organization of American States, Pacific Alliance, and Andean Community. It also serves as a NATO Global Partner. It has the third-largest economy in South America, with macroeconomic stability and strong long-term development prospects.
Employees are entitled to 15 days of paid vacation each year.
Colombia recognizes 18 public holidays.
The employer is responsible for paying two-thirds of the daily wage for the first two days of sick leave. Sick leave is charged at the same cost by social security starting on the third day.
Maternity leave is 18 weeks long and pays 100% of your wages. The boss pays the employee, and claims the money from social security (EPS).
Paternity leave lasts for eight days and is paid at full pay. The boss pays the employee and then claims the money in the EPS system.
There are currently no provisions in the Colombian law regarding parental leave.
Bereavement Leave: 5 days and leave can be paid or unpaid depending on the company policy.
Marriage Leave: 5 days of paid leave.
When an employee is terminated, the cause for termination must be given to him or her in writing. If the employer initiates the termination, the employer is not required to provide a reason for the termination unless there is an accusation of an unjust cause. Employers must get special clearance to fire pregnant or handicapped employees. To dismiss a unionized employee, the employer must obtain approval from a labor judge. If an employee's employment contract is terminated owing to an employer violation, the employee is entitled to severance compensation.
Employers must provide a maximum of 15 days' notice when terminating an employee for unsatisfactory performance. At the very least, the employee is entitled to 24 hours to consider and respond to the dismissal notice. No notice is required in the event of misconduct or a dismissal for just cause. Written notification is required at least 30 days prior to the expiration of an employee's fixed-term agreement.
For indefinite contracts, the probation period is 2 months. For fixed-term contracts, the probation period cannot exceed more than 1/5 of the initially agreed employment term.
Employers are required to pay severance when employees are terminated without cause. Severance pay will be computed as follows for employees with an indefinite term agreement. Employees earning less than the legal minimum monthly wage of ten dollars are entitled to thirty days of pay during their first year of service and twenty days of pay during each subsequent year of service. Employees earning ten times the minimum legal wage or more are entitled to twenty days of salary during their first year of service and fifteen days for each subsequent year of service. Severance pay for employees covered by a fixed-term agreement would be equal to the employee's wage until the duration of the agreement expired.
Colombia, on average, has a 48-hour work week. Individuals typically work five days a week for approximately 9.6 hours per day, Monday through Friday, or six days a week for eight hours per day, depending on the business.
Employees in management, domestic services, shift work, and mechanical drivers are exempt from the legal work maximum.
Work performed between 9 p.m. and 6 a.m. that is not considered overtime is compensated at 135% of the standard daytime rate, or 210 percent on Sundays.
On a regular day, overtime is paid at 125 percent of the standard salary; between 9 p.m. and 6 a.m., overtime is paid at 175 percent.
Daytime overtime is compensated at a rate of 125 percent of the regular rate of pay. Overtime is compensated at 175 percent of the regular rate of pay. Sunday overtime is paid at 125 percent of the regular rate for daytime work and 175 percent of the regular rate for nighttime work. Overtime on holidays is compensated at a rate of 75% of the hours worked.
Overtime compensation is not paid to employees who earn more than ten times the minimum wage or who hold positions of trust.
Colombian compensation laws require that employees be paid on a monthly basis. Casual employees, on the other hand, may be paid weekly. While Colombia's minimum wage is currently 908,526 Pesos per month (2021), the country's legal minimum wage changes annually. Employers should closely monitor any changes that may affect their employees.
Columbia offers free public healthcare to all employees. Private healthcare insurance is also provided by businesses.
Semestral Bonuses are available to employees (prima de servicios). Each year, this benefit equates to 15 days of compensation payable to the employee on the last day of June and 15 days of salary payable during the first 20 days of December. This reward is payable upon cessation of employment in proportion to the amount of time worked during the calendar semester in which the termination occurs.
All local and international companies operating in Colombia must pay income tax, as well as a corporate tax of 30%.
Colombian citizens and foreign nationals who have lived in Colombia for more than 183 days total in any 365 day period not necessarily a calendar year, are considered to be tax residents (residentes fiscales) and are thereafter subject to individual Income tax based on a system of graduated marginal tax rates.
For an income range of 0 to 1,400 UVT, the tax rate is 0.
For an income range of 1,400 to 1,700, the tax rate is 19 percent.
For an income range of 1,700 to 4,100, the tax rate is 28 percent.
For an income of more than 4,100, the tax rate is 33 percent.
The major indirect tax is the value-added tax (VAT). VAT in Colombia is 19% on merchandise, products, and services, with certain exceptions for public transit, water supply and sanitation, and natural gas and hydrocarbon transportation.
The DIAN distinguishes between two types of VAT regimes: common and simplified. The first relates to companies with a legacy of more than 68 million Colombian pesos (about 34,000 USD), while the second refers to those with a patrimony of less than that. Although both are required to pay the same percentage, simplified taxpayers are not required to maintain separate books for VAT or produce invoices.
Before applying for a visa, any foreigner intending to work in Colombia must have a job offer from a local firm. There are numerous sorts of visas available, but the most frequent is the M visa, which is good for five years. These visas are granted in person at the headquarters of the Ministerio de Relaciones Exteriores in Bogota.
Every foreigner with a visa that is valid for more than three months must apply for and get a foreigner's identification card from a regional office. This must be acquired within 15 days of entering Colombia or within 15 days of receiving the visa.
Foreign nationals may apply for a R visa after five years; after five years, they can become Colombian citizens.
Although it is not necessary, it is best practice to have a robust written labor contract in place in Colombia since it offers documentation of the work connection and the terms and circumstances agreed upon by the parties. Furthermore, some conditions, such as those governing the probationary period and the length of the contract for a fixed rather than an indeterminate time, are only legal if they are in writing. A salary and other compensation amounts should always be stated in Colombian pesos rather than a foreign currency in an offer letter and employment contract.
In Colombia, employment contracts might be indefinite or fixed-term. Contracts with an indefinite length but a specified scope of work are known as indefinite contracts. Fixed-term contracts may last for up to three years. Contracts of one to three years in duration may be renewed indefinitely, but they cannot become endless. Fixed-term contracts also encompass a given job with an unknown length that terminates when the assignment is completed, as well as occasional employment with a duration of less than a month.
Colombian Peso (COP)
Although Colombian business law is broad, the Colombia subsidiary creation procedure nonetheless entails a number of processes. An LLC must have at least two participants and a maximum of 25. A board of partners governs and operates this form of subsidiary.
If you fulfill one of the following requirements, you must have a statutory auditor:
1. One is required under the Articles of Incorporation.
2. The value of one's assets exceeds 5,000 times the minimum legal salary.
3. Revenues exceed 3,000 times the legal minimum wage.
If your subsidiary's assets or sales exceed 30,000 times the minimum legal wage, or if the supervision does not correspond to any other Superintendence, your subsidiary will be subject to the Companies Superintendence's supervision.
Subsidiary laws differ each nation, and you must be aware of these laws before proceeding. Each phase of the procedure might take anything from a few days to several weeks, and any errors will simply prolong the process. Colombian subsidiary laws require:
1. There is no need for investment money as long as the subsidiary has two quota holders at all times. The capital must be paid at the time of organization.
2. A Board of Directors is not required. Instead, Partners and the General Manager may make choices.
3. The annual registration price ranges from USD 17 to USD 873.
Colombia subsidiary law is not found in a single location. Instead, you must adhere to a slew of laws and regulations specific to Colombian corporate groups. Before you establish your subsidiary, you should review each of these regulations. Among them include, but are not limited to:
1. Law 1258 (2008)
2. External Circular 001 (2007) of the Superintendency of Companies
3. Code of Commerce
4. Regulatory Circular DCIN 83 issued by the Colombian Central Bank
5. Act 1429 (2010)
6. Decree 19 (2012)