Changes in the income tax calculation

Through Decree N° 1242/13, published in the Official Gazette on August 28, 2013, the government made significant changes in the regulation of income tax for the fourth category, with effect from September 1, 2013.

The Decree formalized a special deduction in order that those employees whose best monthly salary, accrued from January to August 2013, does not exceed the amount of AR$ 15,000, will not have to pay income tax.

In addition, the Decree established an increase of 20% in the tax allowance for employees who earned a gross monthly salary between AR$ 15,001 and AR$ 25,000, from January to August 2013.

Finally, the tax allowance for employees and retirees who reside in Argentine Patagonia (La Pampa, Neuquén, Río Negro, Chubut, Santa Cruz and Patagones, Province of Buenos Aires) was increased by 30%.

Through General Resolution N° 3525/2013, published in the Official Gazette on August 30, 2013, the Argentine Federal Revenue Administration regulated Decree N° 1242/2013, clarifying some concepts related to its application.

According to the resolution, the highest monthly and normal wage considered for the implementation of ceilings between AR$ 15,000 and AR$ 25,000 should have been accrued by the employee for at least six months, between January and August 2013. Thus, the mandatory semi-annual bonus and other bonds would be excluded, among other concepts.

Furthermore, General Resolution N° 3525/2013 foresees that the employers or the social security organisms that have made the settlement for August incomes, shall prepare a new one in order to return the improperly withheld tax to the beneficiaries of this new system.

In consequence, the new framework will apply to the salary accrued in August and earned in September 2013.