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Tax reform approved

reforma-fiscal.8655037a77e64c89a496c1e1f67c76a3
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The fiscal plan has, among its most important reforms, the transformation of the general sales tax into the value added tax (VAT), with which a greater amount of services that are exempt today will be taxed at a rate of 13%.

Likewise, several reforms are made in the income tax, such as the application of global income, so that taxpayers must pay taxes on the globality of their income and not separately. This change increases the final amount that people with higher incomes must pay.

In addition, the income tax that must be paid by people with wages above ¢ 2.1 million is increased by up to 25%.

The third chapter of the fiscal plan introduces a series of modifications to the Public Administration Wages Law, to contain spending on bonuses such as prohibition, exclusive dedication and annuities, while the severance payment is limited to eight years in the public sector.

The final chapter of the fiscal initiative establishes a series of fiscal responsibility standards for government authorities, in order to set limits on state indebtedness in times of fiscal crisis and, above all, define specific responsibilities for the mismanagement of public spending .

Income

Value added tax: It replaces the current general sales tax, but maintains the 13% rate, with some exceptions. With this change, more services are incorporated that will pay the tax.

Products in the basic basket are charged a reduced rate of 1%.

On the other hand, currently exempt services such as professional services, gyms, streaming applications and other services such as Uber and Netflix will be charged.

Other services that will pay less are private medicine (4%, with refund for those who pay electronically), in addition to medications (2%).

In the case of public universities, they will pay VAT on the purchase of goods and services, but they will be refunded what they pay for this tax, in 12 annual installments.

Private education is kept exempt, as well as public transportation, purchases from boards of education and books in print or digital version.

Housing rents of less than ¢ 648,000 per month (1.5 base salaries) will also not pay VAT.

13% of VAT will be paid for electricity consumption that exceeds 280 kilowatt hours per month and for water consumption that exceeds 30 cubic meters of water.

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