Individuals will see a decrease in Income Tax (ISR) on your payroll receipts as of January 2021 thanks to inflation.
The Income Tax Law provides that the rates applied in the calculation of the tax paid by natural persons are updated in accordance with the inflationary increase When this exceeds 10 percent since the last time it was updated.
The last time these rates were updated was in December 2017, so the update became effective as of January 1, 2018.
Given the above, the tax rate must be updated for fiscal year 2021, since cumulative inflation from December 2017 to November of this year it amounts to 11.42 percent, that is, the legal assumption of the Income Tax Law is triggered.
Gustavo Leal Cueva, executive director of Fiscalia.com, explained that this update due to the price advance implies a drop in income tax, since the inflationary effect of the loss of purchasing power of the peso is recognized, causing a general drop in tax.
“Income tax decreases for everyone and all ranks, but the greatest effect will be between salaries that range between 5 and 7 thousand pesos a month, they can have a tax reduction of up to 50 percent which is quite a lot ”, he assured in an interview.
Leal Cueva added that the result of the tax update is that “people will see less ISR and consequently they will have an increase in their net perception, that is, what they will already receive in cash, what people will have available, will be greater ”.
Clarified that the update of the ISR rate It does not imply an increase or modification of the current maximum rate of 35 percent.
“In the context of the pandemic, the reduction of the ISR rate is excellent news because the bulk of workers are those with low wages and they will have more cash available than they had in 2020 even if they do not increase their salary, “the specialist explained.
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