Starting in May, the gross minimum wage which exempts from paying the Income tax for dependent workers will be $506,033, they surpassed Clarín in the Ministry of Economy.
That minimum wage was adjusted in January to $404,062according to the change in the RIPTE index (formal wage index) between October 2021 and the same month in 2022, which was 78.83%, below inflation.
Since then, the RIPTE up to February 2023 (latest official data) has increased by 25.24% in 4 months.
Consequentially, the $404,062 was obsoleteeven more than inflation, and more workers were met by Profits.
The relief represented by the January adjustment was blocking the new 2023 parities because the wage increases that are being agreed lead many workers to pay the profit again or to pay much more.
Economy, on the other hand, is reviewing the draft of the Opinion of the Undersecretary of Revenue on the matter productivity bonuses, per diems and overtime which would apply to a dependent group of workers because for caps and other requirements it is insignificant.
For example, the maximum tax savings an employee receiving a productivity bonus would have would be up to $63,232.65 per year (up to $5,269 per month) in the event of taxation to the maximum extent of 35%. Savings are less if 27% or 31% is achieved.
In this case, for pocket money that exceeds the salary floor, it represents a wage improvement of less than 1%.
If mobility deductions are applied in addition to the productivity bonus, could add tax savings from others up to $63,232.65 (up to $5,269 monthly) if 35% of earnings is met. In the same example, the salary improvement is less than 2%
The draft opinion establishes the following scope:
- Bonus for productivity, cash failure or concepts of a similar nature.
The benefit applies up to an amount equal to 40% of the non-taxable profit for fiscal year 2023 equal to $180,673.28. The tax rate is applied to this value.
As a result, the maximum tax savings employees will enjoy is $63,232.65 per year ($5,269.39 per month), when met at the top 35% tax rate.
- Mobility, per diem and other similar payments
Furthermore, the deduction cannot exceed 40% of the non-taxable profit. As a result, the benefit is $63,232.65 per year ($5,269.39).
- Overtime, additional hours for rotation shifts and the like.
A conditional exemption applies to many requirements. For example, it is due to the difference between the value of ordinary hours and the amount of overtime or to the denomination that had the provisions of each Collective Bargaining Agreement (eg: surtax for rotating shifts). And it will apply provided that such additional overtime or assimilated hours correspond to services rendered on public holidays, non-working days and holidays, including non-working days and weekly rest periods, and it is understood that the latter may coincide with any day of the week, according to the specific of any contract or activity.
Tax expert Marcelo D. Rodriguez underlines the scope of the tax breaks contained in the draft opinion for employees “try to measure the heavy impact that the tax has on these taxpayers today”. and adds it “the measures are insufficient and do not solve the underlying problem, which is generated following the increase in the non-taxable minimum for the year 2023 in the order of 79%, was small compared to the increase in wages due to inflation rates that already exceed 100% per year. On the other hand, these benefits are not generalized, which clearly violates the principle of equality”.
Meanwhile, tax expert César Litvin underlines this “Regulatory limits don’t displace the amount of savings for these concepts too much. The problem is that the deductible limit is linked to 40% of non-taxable profit, a concept whose amount has essentially been evaporated by inflation”.
Specialist Miguel La Vista points out that these measures “magnify the distortion in the tax treatment of income tax of workers in a dependent relationship, as it only reaches workers with a collective labor agreement and excludes all non-contract workers. Also because even within the workers within the collective agreement, some will be exempt only for the concept with which the salary is paid and others will pay on the total”.
NS
Source: Clarin
