Through this Decree, the support program to formal employment (PAEF – for its acronym in Spanish) is created, under which its beneficiaries will receive a monthly monetary contribution, up to three times. This program aims to support and protect the country's formal employment during COVID-19. 

Beneficiaries of PAEF 

Legal persons may be beneficiaries of PAEF, provided they comply with the following requirements:

1. Have been legally incorporated prior to January 1st, 2020. 
2. Have a commercial registry that has been renewed at least in 2019. This requirement only applies to legal persons incorporated on year 2018 or earlier. 
3. Demonstrate the need of the state contribution, certifying a diminishment equal to or higher than 20% of their income. The Ministry will determine the method of calculation of this diminishment. 
4. Have not previously received this contribution in three times. 
5. Have not been obliged, in the terms of the Decree, to restitute the PAEF state contribution.

Non-profit entities are not obliged to comply with the second requirement. In this case, they must provide a copy of the Single Tax Number stating that the applicant is a taxpayer of the Special Tax Regime.

Legal entities with a participation of the Nation and/or its de-centralized entities, higher than 50% of its capital, will not be beneficiaries of PAEF.

Amount of the state contribution 

The amount of the state contribution that beneficiaries of PAEF may receive will correspond to the number of employees multiplied by up to 40% of the amount of the minimum monthly legal wage. For the purposes of this Decree, the number of employees corresponds to the lower value between: (i) the number of employees reported on the PILA (integrated payroll payment sheet) that corresponds to the contribution period of February 2020, or (ii) the number of employees that the beneficiary intends to protect and for which it requires the PAEF state contribution for the corresponding month. 

For PAEF purposes, it will be understood as employees the dependent workers for which the beneficiary performs contributions to the social security system in the PILA, with an income base of contributions of at least one minimum monthly legal wage, and which, in the application month, have not been affected by a temporary suspension of the employment agreement or unpaid leave. 

Application procedure 

The beneficiaries that comply with the requirements must apply and submit the following documentation: 

1. Request signed by the legal representative stating the intention to be benefited by PAEF. 
2. Certificate of incorporation, which establishes the name and document of the legal representative that executes the communication (numeral 6.1.). 
3. Certification, executed by the legal representative and fiscal auditor, or by public accountant in the case the company is not obliged to have a fiscal auditor, in which the following is certified: 

• The number of formal employees that will be maintained in the corresponding month with the aid of the state contribution. 
• The income diminishment. 
• That the requested and effectively received resources will be only and exclusively destined to the payment of salaries of the beneficiary’s formal employees. 

For the purposes of verifying compliance of the requirement established in numeral 3, the Tax Authority (DIAN by its acronym in Spanish) must deliver the Administrative Unit of Pension Contributions and Payroll Taxes (UGPP) the information needed to perform such validation. 

The UGPP must keep a consolidated record of the beneficiaries and the number of employees protected by PAEF and will verify that the beneficiary has not applied for the same monthly contribution before other banking entities. 

Duration of the PAEF

PAEF will be in force during the months of May, June, and July 2020. The beneficiaries can only request the state contribution, one time per month and for up to three months. 

Exceptionally, PAEF beneficiaries that occupy the position of debtors of lines of credit for payroll by the National Guarantee Fund, if they acceded to the credits guaranteed within the emergency, may request the state contribution, for a maximum of three times, until August 2020. In any case, the total amount of resources received by these beneficiaries that correspond to guaranteed credits and PAEF state contribution, cannot exceed the total amount of the employment obligations of the beneficiary. 

Restitution of the state contribution 

Notwithstanding the responsibility that it may entail, the state contribution must be restituted to the State by the beneficiary whenever: 

1. It has not been used for the payment of the employees ‘salaries that correspond to the number of workers. 
2. Having received the contribution, it is evidenced that, at the moment of application, the beneficiary did not comply with the requirements established by the Decree. 
3. If it is proved that submitted documents evidencing the requirements are false. For this purpose, it will be sufficient the communication issued by the entity that originates such documents, contradicting their content. If the beneficiary states that the contribution that was received is higher than the one effectively used for the payment of the salaries of its employees in the corresponding month. Only in the case set forth in this numeral, the restitution of the contribution will correspond to the difference between the received amount and the amount paid out for compliance of the Decree. The financial entity that performed the reimbursement must certify the restitution of such resources. 

Exclusion of Valued Added Tax – VAT

The commission or service that is charged due to the dispersion of the resources by financial entities to beneficiaries of the program will be excluded from the Valued Added Tax. 

Prohibition of seizure and modification of the contribution´ destination

The resources that correspond to PAEF state contribution cannot be seized and must be destined, only and exclusively, to the payment of the salaries of the formal employees of the beneficiary. In this sense, they cannot be used in the payment of any other type of obligation with the financial entity that performs the payment. Nonetheless, the beneficiary can perform, in the payment of the payroll, the discounts previously authorized by its employees. 

Consequences for breach or fraud

Those individuals who receive one or more state contributions, without compliance of the requirements set forth for such purpose and that not inform the corresponding authority, or that receive them fraudulently, or are destined for purposes different from the ones defined in the Decree, will incur in disciplinary, fiscal and criminal responsibility, as applicable.  

Decree 639 of 2020