Other Payments on Income

Find out about withholding taxes and other payments that are deducted from an employee's salary...

Tax withholding is a way of anticipated collection of taxes, by deducting tax at the time of the payment that generates the tax, rather than at the time of the tax declaration. The taxes that are subject to collection via withholding tax are income tax, sales tax, and industry and commerce tax. These withholding transactions are known as Retefuente in Colombia.

There are a number of services and activities that result in tax withholding, and the rates and amounts are established yearly by the authorities and depend on the UVT (Tax Value Units) and whether or not the parties are required to submit a tax declaration – this will depend on the amount of their income.

Transaction Base UVT Rate
General Purchases 27 2.5% - 3.5%
Debit or Credit Card Purchases 0 1.5%
Fees and Commission 0 11%
General Services 4 4% - 6%
Renting Property 27 2.5% - 3.5%

 

Along with the withholding mechanisms, there are a number of other deductions that are made from the salary:

  • Health: All employees must be registered with the health system. The payments for the health system equal 12.5% of the basic salary; 8.5% is paid by the employer and the employee pays 4%. The 4% that is payable by the employee is deducted from the salary and is handled by the employer.
  • Pension: Employees must be registered with the company pension fund. The payments for the pension fund are a total of 16% of which the employer pays 12% and the employee the remaining 4%. The 4% is deducted from the salary and handled by the employer.
  • Pension solidarity fund: Any employee who earns an amount equal to or above four times the minimum wage per month must contribute 1% to the pension solidarity fund, which is deducted from the salary and handled by the employer.
  • Other legal deductions: Any contributions that the employee wishes to make to unions and cooperatives, or court ordered deductions or debts the employee might owe to the employer, can be deducted from the salary as long as there is authorization from the employee, or a court order that mandates this
Information provided by Jose Ignacio Rojas of JL CONSULTING SAS Address: Calle 168 Nº. 9-71. Zona Norte Tel: 320 4911688 [email]jilrojas@gmail.com[/email] Copyright © 2014 JL CONSULTING SAS All Rights Reserved