Just 3% of the 239,400 business signed up to Colombia’s Business Formalization and First Job Law are paying social security contributions despite receiving tax discounts, Colombian media reported Friday.
The discrepancy in the amount of social security contributions were found following an audit by DIAN, Colombia’s tax agency and the Pensions Unit of the Finance Ministry.
The labor law or Law 1429, which has been in effect for one year, gives income tax benefits to businesses which formalize their activities and contract workers without prior experience, those under 28 and female heads of family.
It also provides discounts to companies which give up to date information to the chambers of commerce around the country.
The businesses found to not be complying with the law will have to pay the taxes from which they were previously exempt and will face fines equaling 200% of those taxes.
According to Claudia Rincon, director of auditing of DIAN, the full amount of the unpaid contributions will not be known until April when companies have to present their tax returns.