What are the mandatory salary deductions in Colombia?

In Colombia, mandatory salary deductions include contributions to health insurance, pension funds, labor risks, family welfare funds, and parafiscal contributions to SENA and ICBF, along with income tax withholding. Employers are responsible for calculating, deducting, and remitting these contributions, while employees should stay informed about their rights and the details of their deductions.

Key Salary Deductions

  1. Social Security Contributions:

    • Health Insurance (EPS): Both employers and employees contribute to the health insurance system. The total contribution is 12.5% of the employee's salary, with the employer contributing 8.5% and the employee contributing 4%.
    • Pension Fund (AFP): Contributions to the pension fund amount to 16% of the employee’s salary. The employer pays 12%, and the employee pays 4%.
    • Labor Risks (ARL): This contribution is entirely paid by the employer and varies depending on the level of risk associated with the employee's job. The rate ranges from 0.522% to 6.96% of the employee’s salary.
    • Family Welfare Fund (Caja de Compensación Familiar): Employers contribute 4% of the employee’s salary to a family welfare fund.
  2. Parafiscal Contributions:

    • SENA (National Apprenticeship Service): Employers contribute 2% of the employee’s salary to SENA.
    • ICBF (Colombian Institute of Family Welfare): Employers contribute 3% of the employee’s salary to ICBF.
  3. Income Tax (Retención en la Fuente):

    • Withholding Tax: Income tax is withheld from the employee’s salary based on progressive tax rates. The specific rate depends on the employee’s income level and other individual factors. The tax system in Colombia includes various brackets and deductions, and the exact amount withheld varies accordingly.

Summary of Contributions

Contribution TypeEmployer's ShareEmployee's Share
Health Insurance (EPS)8.5%4%
Pension Fund (AFP)12%4%
Labor Risks (ARL)0.522% to 6.96%0%
Family Welfare Fund4%0%
Withholding Tax (Income Tax)VariableVariable

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