1E9Ct5D

216. Labor Matterscountry regarded as a tax haven. Specifically, if revenues are to be transferred to oneof the countries considered as a tax haven, the amount necessarily is to be subject to awithholding tax at the maximum rate of 33%. Furthermore, transfer pricing rules are tobe applied, regardless of the link between the contracting parties. Since the mentionedDecree is very recent, further development can be expected by the National TaxAuthority.Five things an investor should know about labor matters in Colombia:Employment agreements that are executed in Colombia, regardless of the nationalityof the parties, are governed by local law.At the end of each year, the Government sets up establishes the current minimummonthly legal salary.Under Colombian labor law, all payments made as a direct retribution of theemployees’ work will be considered to constitute salary without exception and thereforeany contractual term that attempts to exclude any such payments from the employees’base salary will be invalidated.Both nationals’ citizen and aliens non-citizen employees are obliged required to joinaffiliate and contribute to the social security system.In addition to the employee's monthly salary, that employers and employees maydefine in the labor employment contract agreement several sums or payments whichare deemed to be excluded from the employee’s base salary base, but such paymentsthat may not exceed 40% of the employee’s base salary.General MattersIn Colombia, a labor contract is an agreement whereby a person agrees to render to another (anindividual or a company) his/her personal services under a continued subordination and receivesperiodical compensation which remunerates the work performed.a) Formal requirementsColombian labor legislation assumes that every personal work relationship is governed by anemployment contract. Thus, for the purposes of declaring that a valid contract has been formed, thefollowing elements must be set forth in such contract:(i)The personal activity of the employee;(ii) continued subordination or dependency of the employee with respect to the employer,granting the employer the authority to give orders and instructions at any time concerning mode,time, or quantity of work; and