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DIAN REVENUE RULING

Bonuses that are occasionally granted by the employer constitute taxable payments

DIAN Revenue Ruling No. 02 of 2016

 

The Colombian Tax Administration (DIAN) clarified that the limit of 204 UVT (Tax Value Units) does not apply to the withholding tax established in Section 401-3 of the Tax Code. It applies only to the payments for the compensation for the definitive discharge of the employee, but not for the bonuses established at the retirement of an employee.

This limit applies only with regards to income tax withholding performed on the payment made to the employee. This does not imply that said compensation is untaxed when the income is subsequently declared by the employee in its income tax return. Said income shall be included among other taxable income in the respective income return of the employee.

Consequently, payments that constitute cash or in-kind incentives, for different causes, occasional or permanent, granted by the mere liberality of the employer or by agreement between the parties, constitute taxable income and therefore should be computed to establish the monthly basis for withholding, in the terms set out in Sections 383, 384, 385 and 386 of the Colombian Tax Code.