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The Government lost a month of revenue from the Income Tax by not enacting the fiscal package

The Government lost a month of revenue from the Income Tax by not enacting the fiscal package
The Government lost a month of revenue from the Income Tax by not enacting the fiscal package

Some tax experts and market operators were over the weekend trying to get a final copy of the Bases law and the Fiscal package, but several commented that it was a impossible task. The public information systems of Congress are encrypted, only for the understanding of the members of that branch of the State.

It was expected, then, that the National Executive Branch would publish a special edition during the weekend in the Official Gazette The two laws were not approved and they did not come into effect. In fact, as of Monday, July 1, the texts have not yet been officially published. It is not known whether this is a deliberate decision or due to bureaucratic problems.

What is known for certain is that, Since the fiscal package was not published before June 30, the Government gave up a month of collecting Income Tax from employees.

Income Tax: why the Government resigned collection

This is highlighted in a report by the tax expert Sebastian Dominguez, CEO of SDC Tax Advisors. “The Government decided not to publish the Fiscal Package Law in a special edition of the Official Gazette over the weekend,” said the tax advisor. And he explains that, “if he had done so, Some employees in a dependency relationship would have faced a retroactive discount of the Income Tax on the remunerations received in Juneincluding both salaries and bonuses.”

Everything derives from the repeal of the Cedular Tax, which was what had been left last year for the assets equivalent to 15 minimum vital and mobile salaries. The replacement, the Income Tax, is annual..

Companies have to deduct the tax from their employees’ salaries throughout the year. When the period ends, they present the Affidavit. If the employer did the calculations correctly, nothing happens. But if he deducted more, he has to return amounts to his workers, or withhold, if it is the other way around.

The special deduction of Profits

“The reform has effect Retroactive to January 1, 2024. To prevent employees from having to pay more income tax than they would have received under the Scheduled Tax, the Government included a special deduction in the fiscal package project,” Dominguez explained.

According to it, this special deduction is applied to avoid a higher tax payment due to the reform, covering remuneration collected between January 1, 2024 and the last day of the month immediately preceding the entry into force of the reform.

If the Government had published the law in June 2024, the special deduction would have been applied to wages received until May 31, 2024. indicated the head of SDC Tax Advisors.

And, in this regard, he highlights that “by waiting and not publishing it over the weekend, the special deduction will be applied to wages received between January 1, 2024 and June 30, 2024.”

“This decision implies that the Government decided not to increase the Income Tax retroactively to June 2024, even though cost of the loss of the corresponding collection,” explained the analyst.

Dominguez said: “We agree with this decision of the Governmentsince in the current economic context, where many people find it difficult to make ends meet, having to pay a tax on a salary already received and spent would generate additional problems.”

Source: Ambito

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