Special Deductions & Non-Deductible Expenses – Third Category Earnings

Posted on Sep 17, 2024 in Law & Jurisprudence

UNIT 9: LAWS

Special Deductions of the Third Category

Article 87

From the earnings of the third category, subject to the limitations of this law, the following will also be deducted:

  1. Costs and other expenses inherent to the business.
  2. Penalties and provisions against bad loans in amounts justified in accordance with industry customs. The General Tax Directorate may establish rules concerning how to make these penalties.
  3. Expenses of organization. The General Tax Directorate admitted his involvement to the first year or depreciated over a period not exceeding five (5) years, at the option of the taxpayer.
  4. Amounts of insurance companies, capitalization, and the like intended to integrate the mathematical reserves and provisions for reserves for unearned premiums and the like, in accordance with the rules imposed on the subject by the Superintendent of Insurance or other official agency. In all cases, the technical reserves estimates for the previous year that had not been used to pay claims will be considered as income and should be included in the net taxable year.
  5. Fees and expenses incurred abroad referred to in Article 8, as are fair and reasonable.
  6. (ITEM eliminated by Law No. 25,063, Title III, art.4, subsection t). – Duration: From 31.12.1998 and shall take effect for the fiscal year 1998.
  7. Expenditures or contributions made on behalf of staff for health care, educational and cultural aid, subsidies to sports clubs, and in general, all expenses of assistance for employees, dependents, or workers. Also deductible are gratuities, bonuses, etc., that staff are paid on time when, according to the rules, must file the affidavit for the year. The Tax Bureau may challenge the part of the ratings, gratuities, bonuses, etc., in excess of what is usually paid for such services, taking into account the work done by the beneficiary of the undertaking and other factors that may influence the amount of remuneration.
  8. Employer contributions made to retirement insurance plans administered by private entities under the control of the Superintendent of Insurance and plans and pension funds of mutual registered and licensed by the NATIONAL INSTITUTE OF ACTION AND COOPERATIVE MUTUAL, to the sum of fifteen cents ($0.15) per year per employee as an employee included in the insurance or retirement plans and pension funds. The amount set out above shall be updated annually by the General Tax Directorate, applying the discount rate referred to in Article 89, referred to December 1987, as indicating the table prepared by the Agency for each month of closing the fiscal period in which the deduction applicable.
  9. Representation expenses actually incurred and duly accredited to an amount equal to ONE AND FIFTY (1.50%) of the total amount of wages paid during the fiscal year in respect of personal dependence. (Subsection replaced by Law No. 25,239, Title I, article 1, subsection n). – Duration: From 31.12.1999 and shall take effect for fiscal years beginning after that date.
  10. Amounts allocated to the payment of fees to directors, trustees, or members of supervisory boards and granted to the managing partners, with the limitations set forth in this subsection, by the taxpayers covered by subparagraph a) of Article 69. The amounts to be deducted in respect of fees of directors and supervisory board members and remuneration to the managing partners for their performance as such, may not exceed TWENTY-FIVE PERCENT (25%) of book profits for the year or so resulting from computing TWELVE THOUSAND FIVE HUNDRED PESOS ($12,500) for each of the recipients of these items, whichever is greater, provided that the allocation within the time limit for filing the annual tax return for the fiscal year which paid. For assigned after that period, the amount to be computed in accordance with the provisions above shall be deductible in the year they are assigned. The amounts will exceed the limit indicated for the treatment of non-beneficiary account for the determination of the charge, provided that the tax balance throw society assessed tax in the year for which fees are paid. (Third paragraph replaced by Law No. 25,063, Title III, art.4, subsection u). – Duration: From 31.12.1998 and shall take effect for the fiscal year 1998.

Reserves and forecasts that this law allows a deduction in the tax balance are subject to tax in the year they are setting aside the risks covered (reserve redundancies, etc.).

Deductions Not Accepted

Article 88

The following are not deductible, irrespective of categories:

  1. Personal expenses and sustenance of the taxpayer and his family, except as provided in Articles 22 and 23.
  2. Interest on capital invested by the owner or partner of the companies included in Article 49, item b) and withdrawals on account of profits or as a salary and any other items that amount to a retirement account profits. For the purposes of the tax balance, the amounts had been deducted for the items included in the preceding paragraph shall be added to the participation of the owner or partner to whom it may concern.
  3. Remuneration or salary of the spouse or relative of the taxpayer. Where it is proved effective services, are allowed to deduct the salary paid in the wing not exceeding that usually pay compensation to third parties for the provision of such services may not exceed that paid to the employee – no more relative – category, except as otherwise provided in the Internal Revenue Service.
  4. The duty of this Act and any tax on vacant lots and fields that are not exploited.
  5. The wages or salaries paid to board members, councils, or other agencies that operate abroad, and the fees and other compensation paid for technical advice, financial or other support provided from outside, in amounts that exceed the limits fixed by the regulations in this regard.
  6. Amounts invested in the acquisition of real and permanent improvements and other costs associated with such transactions, except taxes levied on the free transfer of goods. These costs comprise the cost of goods for the purposes of this Act.
  7. Net income which is intended to increase capital or reserves of the company whose deduction is not expressly permitted by this law.
  8. Amortization of goodwill, trademarks, and similar assets.
  9. Donations are not covered by Article 81, paragraph c) supplies of food, or any other act of donation in cash or in kind.
  10. Net losses from illegal operations.
  11. Benefits to be separate companies to form the legal reserve fund.
  12. Depreciation and disuse losses referred to in paragraph f) of Article 82, for cars and renting them (including those arising from leases), as far exceeding what would correspond inferred relation a car whose cost of acquisition, import or value of place, if they are of own production or hire purchase, exceeds the sum of TWENTY THOUSAND DOLLARS ($20,000), net of value-added tax at the time of purchase, customs clearance, rating or underwriting of the contract concerned accordingly. Nor are deductible expenses in fuel, lubricants, patents, insurance, routine repairs and generally all costs of maintenance and operation of vehicles other than inventories, in excess of the lump sum for each unit, set annually Internal Revenue Service. The provisions of this subsection shall not apply in respect of automobiles whose operation constitutes the primary object of the taxed activity (rental, taxis, limos, commercial travelers and the like). (Subsection replaced by Law No. 24,885, Chapter I, Art. 1.- Validity: from 07.12.1997.) (Note: Law No. 24,917, art. 1, extending the effective date of the replacement of this subsection, which shall be effective 1 January 1998.)
  13. Payments for the exploitation of trademarks and patents belonging to foreign subjects, in amounts that exceed the limits fixed by the regulations about. (Clause incorporated by Law No. 25,063, Title III, art.4, subsection v). – Effectiveness: Effective 31/12/98.)

DECREE

Special deductions for the third category – Doubtful loans and bad – Option

Article 133

For the purposes provided in subsection b) of Article 87 of the law, punishment from the deduction for bad debts and bad about having their origins in commercial transactions, the taxpayer may choose between their application for the account gains and losses or a provident fund set up to deal with contingencies of this nature. Once the taxpayer had opted for the pension system, its variation is possible only after authorization by the Federal Administration of Public Revenue, an autonomous entity within the scope of the MINISTRY OF ECONOMY AND PUBLIC WORKS AND SERVICES.

Calculation of the forecast
Article 134

It is considered normal precautions which are formed on the basis of the average percentage of losses occurred within three (3) financial years, including the establishment of the fund in relation to the existing credit balance at the beginning of each. One of the exercises mentioned. Taxpayers should impute bad loans for the year with this provision, without prejudice to its right to charge the income statement with losses not covered by the forecast. If the forecast shows a surplus on the losses of the year, the unspent balance should be enclosed in tax benefits. Inclusion must be equal with respect to the amounts recovered on loans and punished. Liquidated normal forecasting exercise as directed, shall be allowed as a deduction in the annual forecast for the new year. When for any reason there is a period prior to THREE (3) years, the forecast may be created by considering a shorter period.

Implementation of the forecast
Section 135

Provision for bad debts may be implemented, after notifying the Federal Administration of Public Revenue, an autonomous entity within the scope of the MINISTRY OF ECONOMY AND PUBLIC WORKS AND SERVICES, by applying the percentage referred to the previous article on the balance of credits at the end of the year. The corresponding amount will not affect the tax balance for the year of implementation but will be deductible in the event of cancellation by the system, in the year it occurs.

Indices of default
Article 136

Whatever the method adopted for the punishment of the bad loans, the deductions of this nature must be justified and correspond to the period in which they occur, losses can be deducted for bad debts as verified any of the following rates loss provisions:

  1. Verification of credit in bankruptcy proceedings.
  2. Declaration of insolvency.
  3. Elimination of the debtor reliable.
  4. Initiation of legal actions to collect.
  5. Cessation of operations says of the debtor.
  6. Limitation.

In cases where, for the low significance of the receivable balances, not economically convenient to perform judicial collection efforts, and therefore do not qualify in any of the remaining 39 of 53 indices above 12/03/2010 21:56, also the bad loans will be computed concurrently provided that the following requirements:

  1. The amount of each credit must not exceed the amount set by the Federal Administration of Public Revenue, an autonomous entity within the scope of the Ministry of Economy, taking into account the activity involved.
  2. The loan in question must have been delinquent more than ONE HUNDRED AND EIGHTY (180) days from the occurrence of maturity. In cases where no fixed maturity period or it does not explicitly arise in supporting documentation, it is deemed to be cash transactions.
  3. Must have been duly notified to the debtor defaulted on its condition and claimed the credit payment due.
  4. Services should be cut or failed to operate the defaulting debtor, knowing that in the case of the provision of potable water and sewage, the cutting conditions with regard to services is also true when by applying the standards should meet providers, are obliged to provide the minimum benefits defaulter.

In the case of loans that have collateral, they will be deductible in part attributable to the guaranteed amount only if your connection has been initiated the trial for implementation.” (Article substituted by art. 1, Decree No. 2442 / 3/12/2002 BO 2002. Effect: implementing for the fiscal years ended after the date of publication in BO. This effect also applies for the purposes of calculating the bad debt to be considered for the purposes of calculate the provision for bad debt claims referred to in Article 134 of the Rules of the Law of Income Tax, text ordered in 1997 and its amendments, approved by Decree N ° 1344/98 and its amendments.)

Info
Art 137

Taxpayers must inform the Federal Administration of Public Revenue, an autonomous entity within the scope of the Ministry of Economy and Public Works and Services, in time and how it has, the method used for the punishment of appropriations that are doubtful or bad debts and the rate applied in the case of forecasts.

Non-deductible reserves

Article 148

In the balance of tax deducted only reservations expressly permitted by law. Therefore are not deductible reserves or other estimates, even if they were created by government agencies available.

Article 172

For the purposes set out in Articles 170 and 171 of these rules, when computed HAVE partners in their determinations of tax losses or deductions arising from activities unrelated to their participation, together with the distributed or transferred by the society, it is deemed to have used primarily the latter. ARTICLE… – Against the balance of taxation of the allowance for severance pay, area, length, for the marketing year or calendar year, as the case ended before the date of entry into force of section t) of Article 4 of the Act No. 25,063, which had not been used tax purposes shall be charged to its depletion, the actual compensation paid in cases of layoffs, area, old. To this end, shall take into account the provisions contained in the last paragraph of Article 87 of the law. (First item inserted by Decree No. 254/99, art. 1, inc. I). Duration: From 03.22.1999 and shall take effect from the effective date of the regulations that govern.) ARTICLE… – The last paragraph of Article 77 of the Act does not apply to those reorganizations entrepreneurs whose date of reorganization had occurred prior to the enactment of the amendments to that article by article 4, subsection r) of the Act No. 25,063. (- Second Article taken up by Decree No. 254/99, art. 1, inc. I). Duration: From 03.22.1999 and shall take effect from the effective date of the regulations that govern.) ARTICLE… – The interest in application of the rules of Article 81, paragraph a), fourth and fifth paragraphs as pre-prepared text for that paragraph by Law No. 25,784, which had not been deducted in the fiscal years ending before the date of entry into force thereof, may be counted in successive periods in accordance with legal standards and regulations governing when they were generated. (Section inserted by art. 1, subsection s) of Decree No. 916/2004 BO 23/07/2004).