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Thursday, March 30, 2023

This is the decree of the reduction of the IRPF and the IASS, what does it say?

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Also highlighted is the growth of the Gross Domestic Product (GDP) of around 5% real in 2022, exceeding the projections of analysts and the government at the beginning of the year; the reduction of the fiscal deficit to 2.4%; the increase of 40,000 people employed and the improvement of the employment rate 57.1%, on average; and the recovery of investor confidence, risk rating agencies and international capital markets.

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These conditions are what, according to the government, make it possible to face the tax reduction, compatible with the fiscal rule and with the increase in structural primary spending in priority areas, which has two objectives: to increase people’s real disposable income and deepen support to micro and small businesses.

Uruguay decree reduces personal income tax and IASS.pdf

How will the discount be?

According to the decree presented, the tax system must be improved so that personal income tax is not a tax on wages but, effectively, a family income tax. Therefore, a key point in the rebate project is the increased deductionswhich also allows reducing the tax burden of IASS taxpayers and SMEs.

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Specific measures include increasing child deduction from 13 to 20 Bases of Benefits and Contributions (BPC), maintaining the duplication in the case of children with disabilities; the increase in the maximum cost of housing for mortgage credit deduction from 794,000 to 1 million Indexed Units (UI), maintaining the annual deduction ceiling of 36 BPC; and the increase in rate of deductions admitted from 10% to 14% for taxpayers with annual income of up to 180 BPC. Likewise, the percentage of the amount of lease from 6% to 8%.

These measures reach 75% of personal income taxpayersespecially the 47% with the lowest income, and 14% will cease to be taxpayers —35% of those with the lowest income.

Regarding the IASS, the non-taxable minimum is increased to 108 BPCbenefiting 100% of taxpayers and excluding 11% from paying the tax.

Finally, taxpayers included in the tax regime are forgiven Monotributo Social Mides.

Source: Ambito

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