On Friday, June 30, the Tax Administration plans to issue a decision on the application of the new reduction Income tax for natural persons in a maintenance relationship that will be effective from July 1, 2023. After the entry into force of the Organic Decree on strengthening the family economy.

As a first step, SRI has already updated the format of the form for the projection of personal expenses, including a field for reporting the number of family obligations to reduce. And that is that the number of children or dependent members will depend on the upper limit of deductible expenses and the reduction of income tax. In a few cases, they won’t even have to pay anything.

How much income tax will you pay if the tax reform is implemented?

Companies have already started to inform their associates about this change so that they can submit a new projection of personal expenses with an indication of their expenses. In some cases, they should do it next week. Employers must recalculate tax based on new projections of personal expenses to determine the monthly value to be discounted into the role.

Previously, the deduction was 10% and 20% of personal expenses, capped at about $5,000; this equated to a rebate of between $500 and $1,000, depending on income level. Now the reduction will amount to 18%, but higher personal expenses can be predicted, the upper limit of which will be a certain number of indicators of the basic family basket of the State Institute for Statistics and Censuses (INEC).

For natural persons suffering from or responsible for persons with catastrophic, rare and/or orphan diseases, The amount of the reduction for personal expenses will be equivalent to 18% of the lower value between the personal expenses reported in the relevant fiscal year and the value of the basic family basket multiplied by twenty (20).

This is the personal expenses form for claiming income tax relief from July

One of the novelties of this new tax reform is that in those four items, in addition to expenses that can be deducted for clothing, education, food and health, expenses corresponding to pets for which the taxpayer is charged can also be included. such as food, veterinary and accessories.

Who are family responsibilities?

Tax Reform: Where Will Pet Expenses Be Included in Income Tax Deductions?

Family obligations may not be repeated in the same couple. The deputy director of the SRI, Ricardo Flores, explained that if a couple both have a job in a dependent relationship, they must agree on how to distribute the burdens, because the norm expressly states that the burdens cannot be repeated. If they both report their two children as accusations, they will be in trouble. What will happen is that when the next year’s return is loaded, when the charges are loaded, they will automatically be blocked and it will give an error, and thus a balance to pay will appear, because those charges will not be taken into account.