Faride Raful submits project to prevent low wages from paying Income Tax
Faride Raful. Archive / LD
The senator of the National District, Faride Raful, submitted a draft amendment to the Tax Code under the allegation that since 2017 the State does not index the salary scale subject to Income Tax (ISR), as mandated by the Tax Code.
The senator for the ruling party deposited the initiative on Tuesday in the Upper House to modify article 296 of the regulations above to “adjust the salary against the amounts exempt from taxes, pending since 2017.”
The Tax Code establishes a salary exemption (adjustment for inflation in income tax), and Faride said that this would be modified to index the taxes paid.
The proposal provided by the legislator is that the exempt minimum wage would go from RD $ 34,685.00 to RD $ 41,657.00 per month so that independent professional workers and individuals in general who earn below RD $ 41,657.00 should not pay the tax.
“With this project, we make visible the need to index salaries and set the amounts for 2024, giving enough time to the Executive to adapt its projections and Budget. The exempt minimum wage proposal would go from RD $ 34,685.00 to RD $ 41,657.00 per month,” Raful wrote on her official Twitter account.
The fact that the Code is not amended is not new. For example, from 2012 to 2015, the annual exemption was frozen at RD $ 399,923; during this time, the inflation adjustment was not applied. It is a measure to the detriment of employees due to the repeated suspensions of the inflation adjustment to the annual tax exemption.
The piece was sent to the Finance Committee, the Senate announced.
In past articles published in national newspapers, it was explained that the adjustment for inflation was introduced in the Dominican Republic in 1992 with the approval of the Tax Code (Law 11-92) but implemented in 1998. The figure of indexation, updating, or adjustment for inflation has several purposes, for example, to maintain in real terms the tax exemption and purchasing power of people who pay taxes and prevent taxpayers from paying taxes or that a proportion of them are calculated on inflationary income, among other reasons.
Likewise, the deductible for educational expenses in the Income Tax, equivalent to 25% of the annual tax exemption, will remain frozen. It will also limit the ability of employers to benefit employees who earn amounts less than the yearly exemption by granting school subsidies, which below that limit, are exempt from paying the Supplementary Remuneration Tax.