By Decree 876 dated September 15, 2023, and published in the Supplement of the Official Gazette 401 of September 21, 2023, the President of the Republic issued the Regulations of the Decree-Law for Strengthening the Family Economy. The following is a summary of the most relevant changes:
- Income Tax rebate for personal expenses.
The value of the Basic Family Basket corresponding to the month of January of the fiscal year in which the tax is liquidated must be considered for the calculation of the rebate. Before it was established that the value corresponding to the month of December of the previous year had to be considered.
The expenses corresponding to health, food, education, and clothing may include those incurred for the taxpayer’s pets.
The sales receipts supporting the expense may be issued in the name of the taxpayer or his dependents registered for the calculation of the rebate. Only those individuals whose personal expenses are “practically” covered by the taxpayer within the fiscal year may be registered as dependents.
For the registration of parents as family dependents, their express consent will be required. Children who are not disabled may be considered as dependents until the fiscal year in which they reach 21 years.
- Income tax withholding over income from labor relationships.
For calculating the income tax withholding, the employer must apply the seniority or disability benefits provided by law.
The value of the tax to be withheld must be divided for 11 months, since in January the employer must not withhold income tax.
If the value of the Basic Family Basket corresponding to the month of January of the fiscal year in which the withholding is made has not been published until February, the employer must apply the value corresponding to the month of December of the previous year and subsequently make the applicable adjustments.
When projecting their personal expenses, the employee must include the number of dependents and the differentiated calculation for catastrophic diseases, if applicable.
- Reduction of the Income Tax rate.
The regulations establish the conditions for the reduction of the Income Tax rate for reinvestment of profits in sports, cultural, responsible scientific research, or technological development projects.
The taxpayer must reinvest its profits in its own or third-party projects to be executed in the following fiscal year to the one in which the profits were obtained. The benefit is applicable in the fiscal year in which the investment is made.
The reinvestment of profits may be used for:
- In the case of projects executed by the taxpayer, the resources may be used to acquire goods and services necessary for such project.
- In the case of projects executed by third parties, the resources may be used to acquire shares of the entity executing the project.
- Simplified Regime for Entrepreneurs and Popular Businesses (RIMPE)
The Internal Revenue Service will register the taxpayers in the RIMPE regime when obtaining or updating the Taxpayers Registry (RUC).
The IRS may include, recategorize or exclude taxpayers from the RIMPE regime at any time. These modifications must be notified to the taxpayer and the formal duties derived from the change will be applicable from the month following the notification.
Taxpayers qualified as Popular Businesses may issue sales notes or invoices in the transfer of goods or services.
For calculating the income tax, taxpayers subject to the RIMPE regime will be able to deduct the applicable tax credits, but not the rebate for personal expenses.
- Single Income Tax for Sports Betting Operators
For the applying the “Single Income Tax for Sports Betting Operators”, sports betting activities shall be understood as those that allow the user to obtain a prize for predicting the result of a sports activity based on his personal estimation and not only by chance.
It is clarified that sports betting operators cannot carry out games of chance such as casinos, bingos, lotteries, or bets in general, prohibited by the 2011 referendum.
The decree does not regulate how the “Single Income Tax for Sports Betting Operators” will be withheld, declared, and paid.
