How is the personal income tax payable calculated?


The liquid quota of the IRPF is what corresponds to you paying in the concept of payment of the tax. It is calculated by subtracting from the full quota the deductions to which you are entitled (among others, deductions for investment in habitual residence, for donations, or maternity). It may differ from the amount to be deposited if you have had to make withholdings or payments on account before the annual Income tax return.

The full fee would be the result of applying the tax rate (the percentage of tax that corresponds to you) on the tax base, which is the result of subtracting the reductions provided for in the Personal Income Tax Law from the tax base. The taxable base is the economic quantification of the taxable event: in the case of the income statement, obtaining income, from work income (the most common), from capital income, from economic activities, or capital gains and losses.

What are the differences between a gross salary and a net salary?

Personal income tax withholdings are amounts that your company deducts from your payroll and that it is obliged to enter in the Tax Administration as an “advance” of what you will have to pay in your Income Tax return each year. The percentage of this retention depends on your salary and your personal and family conditions, and ranges between 2 and 45%, the most common being 15%. If after completing the calculation of the tax in the income statement you have been withheld in excess, the statement will be negative and the Treasury will return the difference. Otherwise, you will be responsible for paying the pending amount of personal income tax.

What does the net salary depend on?

Personal income tax withholdings also apply to the self-employed, but only in certain cases. Those self-employed who are registered in the second and third sections of the Tax on Economic Activities must do so, that is, those who carry out professional and artistic activities. And they must apply this retention, which in general is 15%, on the invoices of their services to companies, but not to individuals. For new self-employed (in the first three years of activity), the retention percentage drops to 7%.

What method to calculate the bonus should I use?

As you can see, the tax return by the second method in this example (50.67 pesos) is less than the one given by the first (91.72 pesos). However, depending on the amount of the bonus and the salary of each worker, the result may be different. There are cases in which the first method is more beneficial for the worker. To be sure, it is necessary to apply both and thus know which one is convenient.

How is the ISR of the Christmas bonus calculated?

Only part of the bonus is exempt from ISR payment, if this amount is exceeded, the tax must be paid.

All salaried workers have the right to be paid a bonus once a year, which by law consists of at least two weeks’ salary. Even those who have not worked the full year have the right to be paid a proportional part of it.

The employer is required to pay this gratuity of the Federal Labor Law (LFT) and must make the payment no later than December 20.

By aamritri

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