Many questions and some misunderstandings have been generated by the new tax rules that are part of the recent update of the rules for non-state economic actors.
In this regard, Arelys Pérez García and Dalaimis Wilson Brooks, Director and Senior Specialist of the Taxpayer Services Directorate of the National Tax Administration Office (Onat in Spanish), respectively, emphasized that «these tax adjustments are intended to respond to the demands of the country’s economic and social development; and to increase the level of revenues to the State Budget, a fundamental way to reduce the very high fiscal deficit planned for this year».
The most controversial of these measures is undoubtedly the elimination of some tax benefits, which has a well-founded economic logic and in no way implies that the tax system renounces the use of incentives for taxpayers, which is easily demonstrable.
For example, the suppressed benefit of three months without paying taxes for self-employed workers (TCP in Spanish) who start their activity has been in effect since 2013, and just last year its application meant more than 800 million pesos less revenue for the state budget.
«This represented a significant fiscal sacrifice, as these are revenues that the government lost due to economic policy decisions that were designed to stimulate this activity, but which are no longer functional in the current conditions,» they explained.
Similarly, the elimination of the benefit for micro, small and medium enterprises (MSMEs), which were exempted from paying personal income tax on dividends received in their first year of operation, makes sense.
They also specified that the suspension of these exemptions applies to new registrations as of September 18, as well as to those who already enjoyed such exemptions. «Ex officio, the Onat then establishes these tax obligations as of next October, to start paying in November».
Likewise, this decision is part of an analysis of the incentives granted to all actors in the economy, state and non-state. «Tax incentives are temporary and are applied with the aim of stimulating the development of activities or sectors of interest. Today, both sectors of the economy have shown a sufficient capacity to contribute, so that several of these incentives are no longer in effect,» they added.
Many incentives Take Hold
However, it is important to emphasize that these new tax regulations do not mean that there are no tax incentives that benefit important groups of taxpayers.
For example, the three percent bonus on the payment of tax obligations through electronic payment channels will be strengthened, in line with the priority currently given to banking penetration in the country.
This goodness also implies a fiscal sacrifice that is increasing, but it is positive because it goes in the desired direction. This is evidenced by the fact that in 2022, 43.3% of payments to Onat will be made through digital channels, which implies stopping the collection of approximately 163 million pesos, equivalent to 2.05% of the total collection of natural persons in that year.
In 2023, Onat received 58% of the payments by electronic means. As a result of this advantage, no more than 303 million pesos were paid to the budget, or 2.2% of the amount contributed by individual taxpayers for the entire year.
Other benefits, no less significant for their social sensitivity, are the exemption of recently graduated taxpayers who do not find a job and become self-employed, or the power granted to the municipal councils to exceptionally reduce up to 35% of the amount of tax obligations for sales and services tax and personal income tax payable by MCTs that carry out their activities in rural areas with difficult access and in mountainous areas.
«Tax relief is a measure that allows taxpayers to pay less tax in a legal way. It is used by the State to promote economic activity and investment in certain sectors, or to support vulnerable groups, such as mothers with three or more children under the age of 17, who can apply to have their personal income tax reduced by half,» the experts explained.
The list of incentives, discounts and benefits that the tax system maintains to favor certain social and economic policies is long. These range from the traditional bonuses for prompt payment, which are applied with different percentages and discount periods, to taxes on personal income and land transport, or when the tax on the placement of advertisements and commercial propaganda is paid throughout the year; along with other benefits for strategic issues such as incentives for exports, high-tech companies or those located in technology parks, and the use of renewable energy.
«These are decisions that represent fiscal sacrifices for the state budget, but their social or economic importance is greater,» they reiterated.
Hired Worker is no Longer Self-Employed
Another novelty of the new provisions, with great practical implications, is the distinction between the TCP and the worker it employs, the latter no longer being a direct taxpayer.
«According to the Ministry of Labor and Social Security, 103,884 contract workers are currently registered. The number of active taxpayers in the Taxpayers’ Registry should decrease by the same amount,» they point out.
With this measure, the tax administration should only demand compliance with tax obligations from the owners of self-employment projects, who are now responsible for the payment of their taxes and those of their employees, according to the experts. They also point out that this will also benefit these owners, as they will no longer have to constantly go to the processing offices to register or deregister when the employee changes.
The taxation of these contract workers is now the same as that of workers in any other sector. Therefore, project owners, as employers, pay the social security contribution and withhold and pay the special social security contribution of their employees, in accordance with current legislation.
They also stated that the owners of self-employed projects that use paid labor already have experience with the function of withholding taxes. This is the case of the personal income tax to which their employees are subject, which has been withheld and paid by the same owner or employer for several years.
«The reduction in the number of registered contributors does not, and cannot be expected to lead to a reduction in the level of income collected. The only thing that has changed is that the contributions are now paid by the owner who hires these workers. This measure should allow a greater efficiency in the management of Onat, because we can focus more resources on the collection of taxes from those who are active in the register of taxpayers», they added.
«On the other hand, the tax administration can now offer a more personalized service to taxpayers, constantly improving the digital channel and the services offered through the Tax Portal and our official channels,» they concluded.
