After the approval of the tax reduction project of the Personal Income Tax (IRPF) and the Social Security Assistance Tax (IASS) by the Chamber of Senators, only the approval remains in Deputies. In case of obtaining the half sanction, the initiative will affect more than 83,000 Uruguayans, and these are the key points to understand how they will look after the modifications.
The proposal by the Executive Branch, and announced by the President Luis Lacalle Pou in its Accountability before the general Assembly It contemplates an increase in the non-taxable minimum and different increases in the deductions of the two taxes. Thus, it will benefit 63,000 workers and 20,000 retirees and pensioners.
Income tax and IASS reduction: all the details of tax relief
As for the personal income tax, These are the keys to the discount:
- A 14% of taxpayers personal income tax, the “lower income” they will stop paying that tax.
- For the minor bands – those who win until 60,500 pesos per month–, the rate of deductions will increase from 10% to 14%
- The deduction for dependent child will rise from 73,580 pesos per year –13 bases of benefits and contributions (BPC)– to 113,200 pesos per year –20 BPC–. In turn, the duplication in cases of children with disabilities will continue.
- The cost of housing ceiling will increase to be able to access the mortgage credit deduction, although it was not specified to what extent.
- He real estate lease credit will increase from 6% to 8%
The last four points, linked to tax deductions, will benefit the 75% of the taxpayers of this tax.
On the other hand, as regards the IASS, This is the detail of the measurements:
- will rise the minimum retirement from which payment begins. Thus, from non-taxable minimum of 45,280 pesos (8 BPC) will be changed to 50,940 pesos (9 PCBs)
- He lease credit will increase to 8%
The objectives of the tax cut
Minister Azucena Arbeleche outlined last week the objectives of the reduction in general —increase the real disposable income of people and improve the financial situation of micro and small businesses, promoting formality—, and of the modifications of each tax, in particular.
Regarding the personal income tax, The purpose of the government is “to alleviate the tax burden of taxpaying workers with lower incomes and those who have dependent children” by increasing deductions, which is also understood as a first step towards an income tax, and not wages.
As an example, the presentation puts, among others, the case of a person who earns a nominal salary of 60,000 nominal (45,500 liquids), with a minor child and a rent of 18,000 pesos per month. This person, without the reform, must pay 22,164 pesos per year as income tax —1,847 pesos per month—; while, with the discount, she would pay 10,054 pesos per year, 55% less.
As for the IASS, The objectives are tax relief for retirees and pensioners who pay taxes, as well as a greater benefit for IASS taxpayers with fewer liabilities.
As an example, a person who receives a passivity of 65,000 pesos per month, currently must pay 23,664 pesos per year in concept of IASS -1,972 pesos per month-; while, with the reform, it would pay 16,872 pesos a year, which means a reduction of 29%.
Source: Ambito
