December 11, 2013
Gov’t grants tax break to self-employed
Also announces new boost to union health care schemes
The government yesterday announced the doubling of fiscal category limits for the self-employed, retroactive to September 1. The higher-than-expected increase came after four years without adjustments. And it will not be accompanied by an increase in what taxpayers have to pay for each category.
The government also announced an increase of 1.9 billion pesos to the money given by the state to union health insurance schemes for 2014 was also announced, which will lead to a total amount of 6.5 billion pesos.
The announcement was made as part of a new round of President Cristina Fernández de Kirchner’s “social dialogue” held with business and union leaders. A rise of the income tax floor to 15,000 pesos had already been anounced in the first meeting, but the self-employed had not been covered by the modifications.
AFIP tax bureau head Ricardo Echegaray revealed that the limit for self-employed workers in the “services” category went from 200,000 pesos to 400,000, while the limit to sell good rose from 300,000 to 600,000 pesos.
“We want to reach a balance by correctly evaluating the ability of small and medium entrepreneurs, businessmen, artisans and professionals to pay taxes,” Echegaray said.
The “B” category, the lowest category of the scale since it was combined with “A” in 2010, now covers those who have revenues totalling up to 48,000 pesos per year, followed by “C,” up to 72,000 pesos, “D,” up to 96,000 pesos, “E,” up to 144,000 pesos, “F,” up to 192,000 pesos, “G,” up to 240,000 pesos, “H,” up to 288,000 pesos and “I,” up to 400,000 pesos.
The three highest categories, which also doubled in limits, are for those who produce goods.
Self-employed workers registered in the “J” category can now issue receipts totalling as much as 470,000 pesos, while those in “K” can do so up to 540,000 pesos and those in “L” up to 600,000 pesos.
The measure, which was published today in the Official Gazette, benefits 2,250,338 self-employed workers, of whom 1,510,266 are registered as strictly self-employed and 740,072 others who also pay taxes as full or part-time employees.
Buenos Aires province concentrates 34 percent of the total number of self-employed workers, followed by Buenos Aires City with 17 percent, Córdoba with 11 percent and Santa Fé with 10 percent.
More money for health care
Health Superintendency head Liliana Korenfeld announced a 1.9 billion peso hike for state subsidies toward union health care insurance companies. The companies will receive 6.5 billion pesos in 2014 to provide health services for the self-employed, pensioners and maids.
“We have created two new tools to allow for this increase,” Korenfeld said.
“We have a variety of programmes, and with these new ones we will reach an increase of 1.9 billion pesos.”
Effect on the
The government’s decision will probably lead to a number of people changing categories and consequently paying less money per month in taxes. Echegaray didn’t specify where the state will obtain the money to compensate for the consequent revenue drop, which combined with the income tax floor hike, will have a direct effect on the government’s coffers.
“It will have an effect on the state’s savings. A lot of people will change categories, so they will pay less money,” Agustín D’Attellis, an economist and member of the La Gran Makro pro-government group, told the Herald. “Nevertheless, it will have a smaller impact compared to the income tax hike.”
The self-employed have until September 30 to change categories. An online form has to be filled online at AFIP’s website.
“I don’t think a lot of people will change categories. A lot of self-employed workers haven’t changed categories even though they had to, so now they will be in the right category,” Ariel Setton, economist and member of Plan Fénix, told the Herald. “The state was earning extra money after four years of no changes to the scales, so now they will balance their profits.”
D’Attellis considered that “an agreement with all the sectors of the economy” should be reached and anticipated that there are measures to make big companies pay more taxes.
“In 1994 there was a major decrease in the amount they pay, so that should be updated. There are bills pending regarding that issue that propose a 10 percent increase,” he said.
The old and new limits for each category
Category “B”— 24,000 to 48,000
Category “C” — 36,000 to 72,000
Category “D” — 48,000 to 96,000
Category “E” — 72,000 to 144,000
Category “F” — 96,000 to 192,000
Category “G” — 120,000 to 240,000
Category “H” — 144,000 to 288,000
Category “I” — 200,000 to 400,000
Category “J” — 235,000 to 470,000
Category “K” — 270,000 to 540,000
Category “L” — 300,000 to 600,000