The Government, through Legislative Decree 568, created a new solidarity tax for public officials, contractors of professional services or management support in the public sector, and retirees who earn at least 10 million pesos per month.
The Government ordered that the proceeds of this tax will be specifically destined to social investment in the vulnerable middle class and informal workers. The resources of this tax will be transferred to the Emergency Mitigation Fund - EMF.
The solidarity tax due to COVID 19 will have a progressive rate between 15% and 20% (the latter applies to payments or accruals of over COP 20 million) and its taxable base will be determined by subtracting COP 1,8 million from the monthly payment or accrual.
This tax accrues at the time of the payment or accounting accrual of wages, fees or pension allowances, and must be withheld by the payor.
The Legislative Decree also provides a mechanism to make additional voluntary contributions to the solidarity tax.
Both the solidarity tax due to COVID 19 and the amount of voluntary contributions may be reported as non-taxable revenues for income tax purposes.
This tax will apply as from May 1, 2020 to July 31, 2020.