THE TAXATION OF THE AFFILIATION CONTRACTS OF THE PENSION FUND ADMINISTRATORS (AFP)

Abstract

The purpose of this investigation is to present the product of an analysis and study in relation to the affiliation contract signed between the employer and the Pension Fund Administrator (AFP), and the fiscal impact caused by the early withdrawal of the fund.

The most important challenge that our country has is to expand the coverage of the national pension system to the majority of citizens, given that currently only a small percentage of the country’s economically active population contributes to a social pension fund, therefore Therefore, this requires promoting integrated financial education programs in order to generate the knowledge and interest of the population to participate in a private pension system.

Furthermore, it is vitally important to address the affiliation contract, and thus determine the incentives and obligations that arise from said contract, as well as define the correct determination of the employee’s net taxable income, applied by the Company in withholding at source. in accordance with the provisions of article 22 of the Income Tax Law, and thus avoid administrative and criminal liability for the company for not entering the correct values in the withholding of the Income Tax.

The objective of this investigation is to make the Company aware of its role in the withholding of Income Tax, when there are early withdrawals of funds, and thus guarantee that there is legal certainty in companies in compliance with their tax obligations.