New developments in the UGPP's auditing processes

Beyond the amnesties, and after the entry into force of Law 1943 of 2018 - Financing Law -, and the National Development Plan 2018 - 2022 "Pact for Colombia, Pact for Equity", pending Presidential sanction, there have been innumerable novelties regarding the auditing processes carried out by the Pension Management and Parafiscal Obligations Unit (UGPP). In view of the above, and given their importance and impact both for the business sector and for those who work independently, some of these new developments are briefly described below:

Electronic Notification of Administrative Acts issued by the UGPP: The Financing Law added a subsection to Article 563 of the Tax Statute (E.T.), according to which notification by electronic means will be the preferred mechanism for notification of administrative acts issued by the UGPP. Thus, as of July 1, 2019, when a citizen reports through the Single Tax Registry (RUT) an email, the UGPP will notify him/her of its administrative acts by that means.

In this regard, Article 566-1 of the E.T., also amended by Law 1943 of 2018, establishes that the electronic notification will be understood to have been made for all legal effects, on the date of sending the administrative act to the citizen's email; however, the legal terms to respond or challenge the respective administrative act in administrative venue, will begin to run after five (5) days from the receipt of the email.

2. Actuarial calculation in the omission of affiliation or report of income novelty: Law 1943 of 2018 added paragraph 4° to article 179 of Law 1607 of 2012 modified by article 314 of Law 1819 of 2016, whereby it is provided that the penalties for omission in making contributions to the General Pension System, will be imposed by the UGPP without prejudice to the collection of the actuarial calculation, This is enforceable both to employers who by omission have not enrolled their workers or reported the new employment relationship, as well as to independent workers who by omission have not made the respective affiliation or reported the new entry to the General Pension System, being obliged to do so.

On the other hand, when there is an inaccuracy or delay in any of the subsystems of the Integral Social Security System (SSSI), or when there is an omission in the subsystems other than the General Pension System, in addition to the corresponding penalty, the collection of late payment interest shall be applicable.

Penalty for untimely delivery of information to the UGPP: In addition to the addition of the paragraph described above, the Financing Law modified the same article in the sense of reiterating the power of the UGPP to impose penalties on public or private entities that do not provide the requested information, or that provide it in an untimely, incomplete and/or inaccurate manner, depending on the number of months that such infraction lasts. The penalty caused by such effect, may amount to the sum of up to 15,000 UVT, which for the year 2019 is equivalent to slightly more than $514 million pesos.

However, and in accordance with the provisions of the Financing Law, the penalty will be reduced if the public or private entity provides the complete information and in the required form, within the following twelve (12) months from which the term for the provision of information has expired, provided that in the same month in which the information is delivered, or at the latest within the following calendar month, it makes the payment of the value of the reduced penalty.

The percentage of reduction of the penalty shall apply according to the gross income of the obligor, calculated based on the last Income Tax return, or the gross income determined by the UGPP when there is no return, in the percentages indicated as follows:

4. Withholding of contributions to the SSSI by the Contracting Parties: Let us recall that Article 135 of Law 1753 of 2015, by which the National Development Plan 2014 - 2018 "All for a New Country" was issued, brought with it provisions tending to define the Contribution Base Income (IBC) for the making of contributions to the SSSI, applicable for self-employed workers without a service provision contract. Such article was expressly repealed by the National Development Plan 2018 - 2022, which reproduced in its regulatory body the same provisions of the repealed regulation, except for the provision that established the obligation of the contractors of the public, private or mixed regime, whether they are legal entities, autonomous patrimonies, consortiums, or temporary unions, to directly withhold the SSSI contributions of their contractors.

Such obligation was regulated by Decree 1273 of 2018 of the Ministry of Health and Social Protection, by indicating that, as of June 2019, the contractors should withhold and remit the value corresponding to the SSSI contributions of independent workers with a contract for the provision of personal services related to the functions of the contracting entity, according to the last two digits of the NIT, and through the PILA. All the above based on the information provided by the independent worker to his employer. For such purpose, Decree 1273 of 2018 amended the Sole Regulatory Decree of the Health and Social Protection Sector and the Sole Regulatory Decree of the Labor Sector.

In this way, and in view of the repeal of this provision, Decree 1273 of 2018, and therefore the obligation of withholding by the contractors of the contributions to the SSSI payable by the contractors, would lapse.