Tax Reform: Impact on Salaries and Profits

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News Team

The government has confirmed that the fiscal chapter of the omnibus law, which includes the reversal of the Income Tax, will remain in force. This means that the current scales and amounts will continue to operate, and a smaller number of employees will be covered by the tax on employees’ income. If the reversal had taken place, around 800 thousand workers would have once again been subject to Profits after a few months of having stopped paying it. The restitution of Profits was a point of contention between the provinces and the Casa Rosada, as it would have helped the government increase tax revenues and also provide a cut to the governors as it is a co-participating tax.

Without changes in the Income tax, the conditions of the tribute remain the current ones. With the schedular tax, the salaries that begin to pay the tax are those that reach $2,303,291. The return of the tax for high salaries was a priori part of the initial plan of the Minister of Economy Luis Caputo to achieve fiscal balance this year. The objective was to increase collection from 2024, since the reform applied implied a loss of $1 billion for the coffers of the National State and the same for the provinces, since it is a co-participating tax.

Close to the economic team of former Minister of Economy Sergio Massa, who had promoted the elimination of the fourth category, They assured that if the changes had taken effect, some 800,000 employees and retirees who do not pay it today would have paid Profits again. And an additional collection of 0.5 points of GDP will be generated.

The withdrawal of the personal income project also affects groups of employees who pay Profits, such as magistrates of the Judicial Branch, directors of SA, managers of LLCs, directors of civil associations, mutual societies, among others. All individuals and undivided estates, taxpayers of the income tax, would also be affected, as the tax reform project to profits contemplated an increase in personal deductions and the sections of the tax scales as well as the quarterly adjustment due to the variation in the CPI prepared by the INDEC. This does not apply to income that is included in the schedular tax on high incomes.

In conclusion, the reversal of the fiscal chapter of the omnibus law means that the current scales and amounts of the Income Tax will remain in force, affecting a smaller number of employees. The restitution of Profits was a point of contention between the provinces and the Casa Rosada, and the withdrawal of the personal income project also affects groups of employees who pay Profits.

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