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Bill considers several amendments to the Income Tax

Bill considers several amendments to the Income Tax

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The new Organic Opportunities Creation Bill proposes amendments to the payment and expense deductions for Income Tax and the reduction or elimination of other taxes on goods and services.

There are among the main ones:

Value Added Tax (VAT)

  • The elimination of VAT on sanitary napkins and feminine hygiene implements is considered.
  • Likewise, on electric and hybrid vehicles for public transportation and freight with their inputs, import of fuels derived from hydrocarbons, biofuels, and natural gas, intended for domestic consumption.
  • On the other hand, the following services are exempted from VAT: 
    • Those rendered by Chambers of production, trade unions, and similar that collect fees, aliquots, or quotas to their members not exceeding USD 1,500 per year.
    • Services provided by tourist lodging establishments to foreign tourists who stay in the country for less than 90 days. Such establishments must be registered in the National Tourism Registry and have the Annual Operating License. 

Income Tax

  • To increase the income tax rate from a certain income threshold.
  • Elimination of the expenses that individuals declare in exchange for a tax credit.
  • New taxable base proposal for Income Tax. 
  • The project proposes the creation of a simplified regime for entrepreneurs and popular businesses (RIMPE) that will be in force for three years as of the first income tax return of the entrepreneurs.
  • Incentives for investments, such as tax incentives of up to 15 years to develop new investments, starting from the beginning of activities. 
    • Income Tax exemption for up to 15 years.
    • Exemption or reduction of the Tax on Foreign Exchange Outflows for new investments subscribing to investment contracts and to pay dividends, whose origin is the reinvestment of profits. 
    • Exemption or reduction of the tax on assets abroad for new investments and payment of dividends, whose origin is the reinvestment of profits. 
    • Exemption or reduction of taxes on foreign trade.
  • According to the proposed law, companies derived from mergers between companies or spin-offs will not be considered recently incorporated companies. 
  • The tax benefits accrued during the period of the investment cannot exceed the amount of the investment.

ICE

  • There are also amendments in the ICE (Impuesto a los Consumos Especiales – Special Consumption Tax), such as the elimination of the ICE on mobile telephony plans, video games, hybrid vehicles, and electric vehicles. 
  • It defines the taxable base of ICE for tobacco products, such as cigarettes, will be 150%, while carbonated beverages, among others. 

It has been stated that the purpose of this new bill is to collect 1.4% of the GDP in 2022, or about USD 1.4 billion.

For more details on the amendments, please follow the source below:

Source: Primicias 27/09/21

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