A new law to stimulate job creation and the formalization and foundation of new companies, which seeks to reduce high unemployment and informality in the country, was recently approved by the Colombian government.

 

The new measure aims to attract entrepreneurs to legalize their businesses and hire people and disabled youth through significant tax incentives, such as a 0% income tax the first two years of existence and a progressive system for such payments which will increase to 100 % only after the sixth year since the company's creation date.

With the new measure opportunities for small and medium enterprises that start their activity and become formal in 2011 are looming. For example, projects with fewer than 50 employees and assets of less than 5,000 legal monthly minimum wages (almost 1.5 million US dollars) will have a huge competitive advantage over their competitors that are already in operation of at least 33% margin on their business.

A big boost for a country of informality in many sectors of its economy. On the labor issue the situation is no different, since informal employment surpasses the formal. We must wait to see the effectiveness of this measure in order to accentuate the monitoring and control, benefit consumers and facilitate the prioritization of public policy objectives.
 

Peña Mancero Abogados shall monitor this law developments and regulation for its clients and friends.
 

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