The Ministry of Economy already has ready the decree to be published soon and for which as of this month only the remunerations that exceed 506,230 thousand pesos will pay income tax.
Below this threshold no tax withholding will apply. Likewise, in the months in which the gross remuneration for the month exceeds $506,230 and is less than or equal to $583,851, withholding agents shall compute an increased special deduction.
The proposed modification will allow approximately 250,000 workers in a dependency relationship to stop paying the tax, according to calculations made by the Palacio de Hacienda. Just over 112,000 of these workers are located in the province of Buenos Aires, another 31,000 in the Autonomous City of Buenos Aires and close to 40,000 are distributed between the provinces of Córdoba and Santa Fe.
Employees benefited by province
The previous tribute threshold was, since January 2023, of $404,062, with which the increase in the exempt amount is 25.3 percent
The provisions will be applicable to remunerations and/or gross monthly salaries accrued as of May 1, 2023, inclusive, with the exception of the provisions of article 1, which will take effect as provided therein. The text of the draft decree establishes in that article that for the fiscal period 2023, the amount of remuneration and/or gross assets, for the purposes of the provisions of subsection z) of article 26 of the Income Tax Law, text ordered in 2019 and its amendments, in $506,230, inclusive”.
The previous threshold of the tax was, since January 2023, $404,062, with which the increase in the exempt amount is 25.3 percent. Accumulated inflation as of March, as reported by INDEC, was 21.3%, so it will suffice for the figure for April, which the official statistical agency will report next Friday, to exceed 2.9% for the threshold increase below which earnings are not paid falls below inflation for the first four-month period of the year. Most of the consultancies estimate for April an inflation higher than 7%.
It happens that the increase in the floor is due to the variation of the RIPTE, the index that measures the evolution of registered salaries, between the month of October 2022 and the month of February 2023 (last data published) which was 25.29%. .
What is the special deduction Article 30 subsection C section 2?
The special deduction referred to in Article 30 subparagraph C section 2 of the Income Tax in Argentina is a specific deduction which applies to annual gross income of the Workers in dependency relationship and who made annual profits above a certain amount.
This special deduction consists of a fixed amount that is subtracted from the income tax base. The amount of the special deduction it varies according to the income level of the taxpayer and is updated annually based on inflation.
Specifically, for the 2023 fiscal period, the special deduction is $2,716,386.61 per year for workers who have obtained annual earnings of less than what is determined by the Treasury and gradually decreases until reaching $0 for those workers whose earnings annual are higher.
For example, before the deduction, AFIP established an increased special deduction of $115,775 for workers with a gross remuneration of $404,331 and it decreases until reaching 0 in the case of $466,017. However, with the 25.29% increase, the amounts to be discounted as gross remunerations will be updated.
It should be remembered that this special deduction is applied before calculating the Income Tax, therefore it reduces the amount of tax that the taxpayer must pay. However, this deduction is not cumulative with other specific deductions, so the taxpayer must choose the deduction that is most favorable.
When does the special deduction apply to earnings?
The special deduction in the income tax applies to people who have a gross salary between 506,230 pesos and 583,851 pesos, where an increased special deduction is computed.
Prior to the 25.29% increase established by the Ministry of Economy, the special deduction was applied in cases where the gross salary was between 404,062 pesos and 466,017 pesos.
Those people with a salary greater than $506,230 will be computed an increased special deduction.
Income tax deductions
The Income Tax Law has other deductions.
personal deductions
They are the amounts for minimum non-taxable profit, family burdens y special deduction.
general deductions
These are concepts that can be deducted from the profit of the fiscal year with the limitations established by law. Some of the concepts are services and tools for educational purposesmedical fees, insurance premiums in the event of death, donationsinterest on mortgage loans, rents, particular houses, Funeral expenses, among others. To see the complete list you can access the AFIP page.
specific deduction
This deduction is applied from the fiscal year 2017 when it comes to income from retirements, retirements and pensions. In this case, the deductions for non-taxable earnings and the special deduction are replaced by it. The Specific deduction is equivalent to 8 times the sum of the guaranteed minimum assets.
The specific deduction does not apply to people who must pay the personal property tax, unless they have to do for the possession of a property for a single residence.
Income tax comprises four categories depending on the source of income
Income tax categories
The Income Tax Law includes four categories according to the source of earnings.
- First category: corresponds to the profits generated by the usufruct of urban and rural properties
- second category: corresponds to the income obtained from shares, interest, dividends, etc.
- third category: corresponds to the profits of companies and sole proprietorships
- fourth category: corresponds to the profits obtained by personal work as:
- the performance of national, provincial, municipal and CABA public offices;
- the work of judges, officials or employees of the Judiciary of the Nation and of the provinces appointed as of the year 2017;
- the work of employees in a dependency relationship;
- Retirements, pensions, withdrawals or any subsidy originating from personal work;
- The services provided by the members of the cooperative societies;
- the amounts assigned to the managing partners of limited liability companies, limited partnerships and limited partnerships by shares.
- the exercise of liberal professions;
- the performance of the activities of broker, commercial traveler and customs broker;
- compensation in money and in kind and travel expenses that are paid as an advance or reimbursement of expenses for service commissions carried out outside the headquarters where the tasks are provided.
- the sums paid to the teaching staff as an additional fee for teaching material that exceeds 40% of the non-taxable profit.
- The sums paid for the dismissal of people who work in managerial and executive positions of public and private companies that are greater than the minimum compensation amounts provided for in the applicable labor law.
- The monthly and lifetime allowances recognized to the President and Vice President of the Nation provided by Law 24,018;
- The net benefits of non-deductible contributions derived from private retirement insurance plans managed by entities subject to the control of the Superintendence of Insurance of the Nation.
