Tax Impact on Salaries derived from the proposed changes to the Income Tax Tariff Héctor Silva Meeting - Breackfast October 21, 2009
©2009 Galaz, Yamazaki, Ruiz Urquiza, S.C. Todos los derechos reservados. PROPOSED CHANGES AFFECTING INDIVIDUALS FROM THE SEPTEMBER 8, BILL OF MODIFICATIONS Increase of maximum tariff up to 30% Limitations for the exemption of sale of houses Income tax withheld on interests Limitations to the deduction of interests on mortgages on purchase of houses. 2
©2009 Galaz, Yamazaki, Ruiz Urquiza, S.C. Todos los derechos reservados. 3 There is no changes in the exempt income for workers Additional clarifications to consider exempt the fringe benefits (modified on June 4, 2009) Changes in articles 113 and 177 (monthly and annual tariffs) Tax subsidy without changes COMMENTS RELATED WITH SALARIES
©2009 Galaz, Yamazaki, Ruiz Urquiza, S.C. Todos los derechos reservados. EFFECTS IN THE INCOME TAX ON SALARIES AS FROM The following calculations show the impact the new tariff will have in the tax to be paid by the workers. X’s the minimum wage Income Tax % de increase from the ISR de 2009 Monthly taxable wage a a , % 4.47, %7.74%6.97% 58, %6.34%5.06% 1016, , , , , %4.44%1.60% 1524, , , , , %4.07%0.93% 2033, , , , , %3.91%0.63%
©2009 Galaz, Yamazaki, Ruiz Urquiza, S.C. Todos los derechos reservados. COMMENTS Salaries up to four times the minimum wage have no changes Salaries in excess of four times the minimum wage and up to 4.4 times the minimum wage (between Ps$6, and Ps$7, are affected with and additional 8.52% Salaries in excess of 4.4. times the minimum wage have an average increases of % from 2010 to % in % as from 2014 No changes in the calculation of the tax subsidy 5
RECOMMENDATIONS Run scenarios with the possible effect for each of your employees Review with possible changes in the salaries compensation and measure the effect in income tax and social security Verify with labor advisors OTHER LAST MINUTE COMMENTS Notice to the Social Security authorities on services agreements signed from July 10 to Sep. 30 Changes in the final approval of tax reforms. 6
©2009 Galaz, Yamazaki, Ruiz Urquiza, S.C. Todos los derechos reservados. Héctor Silva +52 (664)