The question was simple: how should a person who works as a director and employee in company A and, in turn, is an employee of company B, pay income tax? The unknown was under the assumptions in which the companies were linked or not.
The consultation of CPCECABA It arose because there are two models: the general regime for the fourth category (called “progressive scheme” in the opinion) and the so-called “Cedular Tax on Higher Income of the Fourth Category”.
We talk not only about different ways of calculating the payment of the tax, but also about the tax burden. To put it simply, the Scheduled Tax is a “Tax Paradise”, while the Progressive Tax is a “Fiscal Hell” within Profits.
Because? In the first case, salaries of up to $2,340,000 gross per month are deducted, while in the second the figure is up to $220,000. Yes, you read that right. The ratio is 1 to 10.
What does the Law say?
Article 94.1 of the Profit Law (incorporated by Law 27,725) maintains that “Constitute greater income, in the terms of this chapter, those included in subsections (…) -; b) -except those paid to directors, (…) of article 82 of this law.”
The simplest reading leads to the conclusion that the “higher income” are salaries (from subsection b) of article 82 of the Profits Law, except those paid to directors. They will remain within the framework of the “tax haven” of the Scheduled Tax.
It is important to note that the norm does not establish any kind of regime of Fiscal Consolidation or Contributing Unit by Group or Economic Group as exists in many countries.
On the contrary, each capital company (or entity considered as such) is taxed as a separate taxpayer. Thus, it is easy to deduce that the norm is addressed to each separate company.
That is to say, If company A pays a salary to a director, said salary is exempt from the benefit of the “tax haven” of Profits, for which the “Progressive Tax” is taxed.
Now, if company A pays a salary to a person who is not a director of company A, but who is a director of company B, C and/or D, the “Cedular Tax” is paid.
Arbitrary and illegal
In this case, the principle of legality in tax matters comes into play, which is constitutionally rooted, and leaves no room for decision to the interpreter, be it a judge or executive bureaucrat as is the case. This is what the Supreme Court of Justice of the Nation (CSJN) itself said in the ruling “Multicambio SA without appeal”; 1993 ruling in which he established doctrine on the matter.
On that occasion, he maintained that “the interpretation of the tax provision must be carried out within the scope of the provisions contained therein, and not on the basis of the possible results of its application, which would mean evaluating it based on factors foreign to its rules”.
Nevertheless, The DNI considered that “if a director receives fees and the same company (or another related company) pays him a salary for his work in a dependency relationship, all this income is taxed under the progressive scheme.”
What has been said: the law does not establish any hypothesis of extension or “future of attraction” between related companies. There is also no Fiscal Consolidation regime by Economic Group. Therefore, the conclusion is clear and forceful: the director of company B is not affected by the “Progressive Tax” in relation to the salaries he receives from company A. This is even when companies A and B are linked, whichever be the type of link. For this reason, we are facing an arbitrary and illegal ruling, and therefore inapplicable. A light of hope
Why is what the DNI can say so important?
Simple: the interpretations of the regulations that you make are binding on the Federal Administration of Public Revenues (AFIP). In other words: the statement made before the Council should be considered by the collection agency when carrying out the control of the sworn declarations of Profits.
Although national treasury officials should not necessarily take their opinions as definitive and can reinterpret the situation raised considering the principle of legality, there is also a glimmer of hope. The reform project presented by the national government proposes the elimination of the special chapter established in the Income Tax Law, so there is a possibility that the interpretation of the DNI will fall on deaf ears.
In effect, the proposal determines that all income in the fourth category will fall within the general regime without exceptions and each income (fees and/or salaries) will be treated accordingly. This way, The payment of the tax will be a little more equitable and there will not be so much difference between the subjects.
At least, if you consider the current situation in which being in hell or tax haven is a matter of charges. Of course, for this to happen, it will be vital that Congress approves the initiative without changes. Otherwise, this gap will continue to exist between being the general regime or the schedular tax.
Expansion Holding Partner
Source: Ambito
