Collections and returns under Law 1429 of 2010

Employment Formalization and Creation Law

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On December 29, 2010, the National Government passed Law 1429 of 2010 or the Employment Formalization and Promotion Law, which provides benefits and incentives for entrepreneurs to lower the cost of formalizing their activities, and support in growing their businesses.

 

Check below the list of monetary returns and/or collection of surplus

 

 

Benefits from the law

For those who register their company into the Commercial Registry

This way Article 4 of the Law continues to be in effect, whereby:

They shall not be liable for the payment of income taxes during their first two years in operations, and they shall have a reduced rate between the third and fifth year. This benefit shall not expire.

These incentives are not just applicable to new small companies, but also to those already in existence, which choose to become formalized.

More dispositions about the public registries law

Some of the facilities and other dispositions provided to entrepreneurs by law, in matters related to public registries.

 

Norms to prevent existing companies from obtaining benefits under the law

Those who provide false or fraudulent information in order to be covered by the benefits established by law, shall be liable to pay the amounts of any discounts they receive, in addition to a penalty equivalent to two hundred percent (200%) of such amounts, notwithstanding any additional criminal penalties applicable.

The Special Administrative Unit for Pension and Labor Contribution Management for Social Protection (UGPP) shall be tasked with tracking and overseeing the mandate set forth in article 48 of the Employment Formalization and Generation Law.

 

Cleansing of the Merchant's Certificate

Those registered companies which have not renewed their Merchant's Certificate for over ten years shall be awarded a 12 month term to get up to date; after such period, that is, after December 29, 2011, said legal persons shall be considered to have been dissolved, and being liquidated. In the case of individuals and commercial establishments, branch offices and agencies, they will be canceled and terminated on the same date, notwithstanding any rights by properly registered third parties.

 

Company reactivation

The law allows for companies being liquidated to be reactivated through an agreement from the general shareholders meeting, the board of partners, the single shareholder or the foreign company that is the owner of foreign branch offices in Colombia, as long as external liabilities do not exceed 70% of the company's total assets, and as long as the distribution of the remaining assets to the associates and partners has not yet been arranged. The decision for such reactivation shall be recorded in a minute that will be registered in the merchant's registrar at the local chamber of commerce.

 

Electronic Media

Electronic media will be used for the processing of bankruptcy proceedings in accordance with the dispositions set forth in Law 527 of 1999 and for complying with the proceedings involving the Commercial Registry, non-for-profit organizations and for the delegate Unified Offeror Registry with chambers of commerce.

In those cases in which a personal appearance is required for a specific proceeding, such a requirement will be deemed as fulfilled through the use of a digital signature. These kinds of electronic media shall not be used whenever the law requires that securities be provided in their original version.

Other matters of interest

Furthermore, Law 1429 of 2010 includes other matters of interest for entrepreneurs in Bogotá and the region, which include the following:

  • The National Government is ordered to focus its enterprise development plans.
  • Progressive benefits are established in Income Tax and Labor Contributions for new small companies.
  • Incentives are established for any company, large or small, which has formalized its operation and which increases the size of its payroll by hiring workers who meet some of the following conditions:
    • People younger than 28, women older than 40, who have been working for at least one year without a formal contract, mothers who are the heads of their households in Sisben levels 1 and 2, people who have been reinserted into society after having participated in the armed conflict, people with disabilities, people in a condition of forceful displacement or any other individual who makes less than 1.5 minimum monthly wages and who has not made social security contributions.
    • The benefits considered here include the fact that companies may discount from their income tax payments, during two or three years, as applicable, the amounts of labor contributions they have made for these employees, as well as a percentage of their health and pensions contributions.
  • Norms are designed aimed at simplifying labor and commercial proceedings, in order to ensure that becoming formalized is less cumbersome and to generate a greater competitiveness. Thus, companies will not require authorization from the Ministry of Social Protection to agree on loans, advance payments, salary deductions or compensations with their employees, nor to pay up to half of the amounts accrued for vacations in cash, or for them to use their severance pay to buy a house, or to do renovations on it. They will also not require for their work regulations to be approved or to create the Occupational Health Committee.
  • Creation of the information system regarding employment demand with governance over its operation.
  • With regards to the formalization of workers, the Law dictates that the benefits received through the Sisben system will continue to be provided to colombians for up to one year after they are hired for a job. The purpose of this is to avoid workers themselves from resisting formalization. 

 

In order to gain access to, or to preserve the benefits awarded to them through this law, entrepreneurs must meet the following requirements:

1. Total staff must not exceed 50 employees.

2. Total assets must not exceed 5.000 Minimum Monthly Legal Wages (MMLW).

3. The Merchant's Certificate must be renewed on March 31, of each year, at the latest.

4. Not be covered by any of the conditions described in article 48 of Law 1429 of 2010, nor in those listed in article 6 of Decree 545 of 2011.

 

Monetary returns for small companies

Monetary returns shall be carried out in accordance with the legal times set forth, that is, if the return is smaller than 3 Monthly Legal Minimum Wages, the money will be disbursed immediately; for all other cases, the time-frame is 10 work days.

1. In order to request a monetary return through our networks, follow the procedure below:

Check the list of beneficiaries for Monetary returns
- Validate whether your small company is eligible for this benefit. 
- Download and fill-out completely the Monetary Return Request Form, which must come signed by the registered person and/or the legal representative of the company, as applicable. 
- Visit any of our business venues and present the aforementioned form, in addition to your personal ID. 
- File the monetary return request at the teller window. 
- The monetary return will be carried out in accordance with the established response times. 

2. If you wish to request the monetary return via e-mail, please follow the steps below:

Important: requests made through this channel can only be disbursed via wire transfer into an account whose holder is the registered person, be it an individual or a legal person. No accounts in the name of the company's legal representative will be accepted.

- Ensure that your small-sized company is eligible to receive this benefit. 
- Download and fill-out completely the Monetary Return Request Form, which must come signed by the registered person and/or the legal representative of the company, as applicable. 
- Use a corporate account (only applicable to legal persons) to send the aforementioned form to the e-mail: beneficiosley1429@ccb.org.co
- The monetary return will be made via electronic wire transfer in accordance with the established response time-frames. 

3. Monetary return, through an offset in the cost of renewal:

The amount owed to the entrepreneur may be offset against the cost of renewal of the merchant's registrar; when the proceeding is being carried out, our system will identify the positive balance in favor of the entrepreneur, and will discount the corresponding amount payable from it. If a positive balance still remains after the renewal fee has been paid, it may be requested following the procedures listed in numerals 1 and 2.

Surplus payments

Follow the procedure below in order to pay the outstanding surplus after discounting the Merchant's Registrar or renewal fees:

- Check the list of individuals for surplus collections. 
- Validate whether your company is required to make a surplus payment as well as their corresponding amount. 
- Go to any of our business sites, present your ID and make the corresponding payment.

 

Note: In order to speed up the proceeding at the CCB site, please note the quotation number included in the registration listing. 

Monetary returns for companies being liquidated

Follow the procedure below in order to request the return of monies on behalf of companies which, after having been liquidated, renewed their Merchant's Registrar after the entry into effect of Law 1429 of 2010:

1. Validate whether your company is eligible to request this return. 
2. Download and fill-out completely the Monetary Return Request Form, which must come signed by the registered person and/or the legal representative of the company, as applicable. 
3. Present the following documents at any of our business sites: 
Monetary request form 
- Original and one copy of the payment receipt corresponding to the proceeding for which you are requesting a monetary return. 
- Copy of the renewal form you received at the time of renewal. 
- Copy of the company's legal representative's personal ID. 
4. These documents will be forwarded to the corresponding area for review and authorization, and will then be sent back to the business venue in order to record the corresponding return proceeding into our system. The monetary return will be carried out in accordance with the established response times.

If you wish to know more about this, or if you have questions about this whole proceeding, send us an e-mail: beneficiosley1429@ccb.org.co.

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