The 2022 Budget was rejected today by the opposition in the Chamber of Deputies and the objective of the ruling party to be able to sanction the “law of laws” before December 31 to thus advance in the negotiations with the IMF was truncated. In this context, after the Minister of Economy Martin Guzman confirmed today that the 2021 Budget will be extended, tax experts consulted by Infobae They gave an account of the main changes in tax matters for next year and revealed the confusion that exists in this regard.
Sebastian Dominguez, from SDC Asesores Tributarios, told this media that if the Government wants to modify taxes, it will have to do so based on a new law, given that the changes established in the 2022 Budget, such as the Executive’s power to increase the tax rate. Personal Property Tax would no longer apply.
“It is debatable that the Government can, through the Budget Law, make changes to the tax regulations. Because it is for income and expenses and not to extend the validity of a tax or modify aliquots, although it is something that has been done“, he claimed.
In that sense, he stressed: “The changes that the Government wants to implement and that were provided for in the Budget Law 2022 have to come out through another specific law.”
Likewise, Domínguez said that as of an extension of the 2021 Budget, the modification of the adjustment for inflation in the Income tax for companies is not carried out. “For fiscal years beginning on or after January 1, 2021, the 100% adjustment for tax inflation, whether it is profit or loss, is allocated per fiscal year. That’s okay and it’s what it should have always been. This is good news for companies ”, he stated.
On the other hand, he added that the teacher incentive is not extended and neither is the money laundering law. “Another law should come out where laundering is extended. That is something that has been asked to try to promote the construction industry a bit.”, He detailed.
The changes that the Government wants to implement and that were foreseen in the Budget Law 2022 have to come out through another specific law (Domínguez)
While he stressed that “the profit rate is unchanged”. Regarding Personal Assets, he said that the rate for goods abroad was in force for 2019 and 2020. However, he clarified that for 2021 this increase of up to 2.25 is not in force “because the Executive had the power to establish that rate for two fiscal periods”.
“He did it, he took it to 2.25, but when that faculty is finished on December 31, 2021, it ends and the previous scheme is returned,” he said. However, for Domínguez, the Government will maintain that the Executive’s power to set the increased rate remains in force. “The AFIP or the Ministry of Economy have to inform if the increased rate is in force or not. We will know that later ”, he remarked.
Along the same lines, the tributarist Cesar Litvin, of Lisicki, Litvin & Asociados, told Infobae that “The non-approval of the Budget for 2022 will have the consequence that the clause that extended the validity of the surcharge of Personal Assets for assets abroad is not in force”.
What the Government requires to continue increasing the rate of Personal Assets has to present a new bill that passes through Congress. However, the opposition is not in favor of this increase in Personal Assets (Litvin)
“For the fiscal year that ends on December 31, 2021, which is the photograph for which Personal Assets are paid for assets in the country and abroad, it results in the expiration of the excess rate, which was for two exercises, 2021 and 2022. In this way, for next year the surcharge of personal assets for assets abroad does not apply, ”said the specialist.
Regarding the power of the Executive to increase the aliquot, he said: “What the Government requires to continue increasing the aliquot of Personal Assets has to present a new bill that passes through Congress. However, the opposition is not in favor of this increase in Personal Assets ”.
And he added that the maximum rate reaches 2.25% and in some cases the tax on the income obtained from the encumbered assets becomes confiscatory. “The tax is confiscatory when it absorbs a substantial part of the income”, He clarified.
It should be remembered that the president Alberto Fernandez may extend the 2021 budget for the year 2022, as provided by law 24,156 and its amendments, after the Chamber of Deputies rejected today by vote the draft Budget for next year.
Specifically, in its article 27 the regulations establish that “if the general budget is not approved at the beginning of the financial year, the one that was in force the previous year shall govern.” In this sense, it is provided that the National Executive Power, in the budgets of the central administration and decentralized organisms, must introduce adjustments in the resource and expenditure items.
Meanwhile, the tax specialists Horacio Cardozo He told Infobae: “Necessity and urgency decrees cannot be applied in tax matters. So there will be no extensions that do not come out by law”. Likewise, he stressed that the extensions included in the Budget law or authorizations to the President may not be applied. “And if they try, Justice will straighten these issues,” he said.
The main taxes to be paid in 2022
This is Law No. 20,628 that establishes the tax on the obtaining of profits by human and legal persons. The personal tax is determined based on the real gross profit, from which the necessary expenses to obtain, maintain and conserve the source in productive conditions are deducted.
The rates are as follows: the tax is determined by applying to the net profit subject to tax -net profit minus personal deductions-, a progressive rate according to a scale of 9 profit bands, their minimum and maximum rates being 5% and 35%, respectively.
Those who have an accumulated taxable net profit between $ 0 and $ 64,532.64 will pay 5%. People who have earnings between $ 64,532.64 and $ 129,065.29 will pay 9%; between $ 129,065.29 and $ 193,597.93 (12%); between $ 193,597.93 and $ 258,130.58 (15%); between $ 258,130.58 and $ 387,195.86 (19%); between $ 387,195.86 and $ 516,261.14 (23%); between $ 516,261.14 and 4,774,391.71 (27%); between $ 774,391.71 and $ 1,032,522.30 (31%) and from $ 1,032,522.30 onwards 35 percent.
Regarding the Income tax for companies, it should be remembered that the law enacted in mid-2021 established the new scales. The norm sets an aliquot of 25% from 5 million pesos. In this way, it establishes a first tax bracket of 25% for accumulated net profits of up to $ 5 million, an aliquot that will not only cover SMEs but also most medium-sized companies.
The second notch is for accumulated net earnings of more than $ 5 million and up to $ 50 million, where companies will pay $ 1,250,000 plus 30% on the surplus of $ 5 million. The last segment is for accumulated net earnings greater than $ 50 million, where $ 14,750,000 will be paid plus 35% on the excess of $ 50 million. The distributed dividends will pay in all cases the special rate of 7%, through the current tax.
Human persons domiciled in the country and undivided estates established in it are taxed according to this criterion, on assets located in the country and abroad, as well as on Income Tax. Likewise, human persons domiciled abroad and undivided estates located abroad are taxed on assets located in the country.
In the case of real estate destined to the taxpayer’s house-room, or of the deceased in the case of undivided successions, they will not be covered by the tax when their determined values are equal to or less than 18,000,000 pesos.
The non-taxable minimum of the tax is calculated on the amount of the goods that exceed the following sum: fiscal period 2019 and following, equal to or less than 2,000,000 pesos.
It should be remembered that the opposition asks to address the increase in the non-taxable minimum, which has not been updated since 2019. The equity from which taxpayers must pay Personal Assets remains at $ 2 million since 2019. This year, the Senate gave half a sanction to a Bill that raises that minimum to $ 6 million, but has not yet been discussed in the Chamber of Deputies.
Meanwhile, as of the 2019 fiscal period, the aliquots are increased and scale sections are incorporated for the tax to be entered by human persons domiciled in the country and undivided successions located in the country, for assets located in the country and abroad -except for those subjects that for the goods located abroad could be reached at the differential rate -, according to the following scale: goods between $ 0 and $ 3,000,000 inclusive (0.5%); assets between $ 3,000,000 and $ 6,500,000, inclusive (0.75%); goods between $ 6,500,000 and $ 18,000,000, inclusive (1%) and from $ 18,000,000 onwards, 1.25 percent.