That reform increased the ISD from 2% to 5% and created a single 2% tax on bananas. Until the end of 2023, the sentence must be fulfilled.
The Constitutional Court (CC), through judgment No. 58-11-IN/22, declared the unconstitutionality of the so-called Law for Environmental Promotion and Optimization of State Revenues (tax reform). This regulation was approved in 2011 through a decree-law, without a vote in the plenary session of the Assembly.
This fact is one of the main motivations for the unconstitutionality. Despite the fact that on November 17, 2011, the National Assembly of that time approved a resolution denying the processing of the law on the grounds that it did not meet the minimum requirements, the Presidency of the Republic sent it to the Official Registry and published it automatically. in Supplement No. 583.
On the other hand, although it was presented only as a tax reform, the constitutional judges found that it does not have a unit of subject matter, that is, it deals with various topics other than taxes.
Normally, the sentences of the CC are of immediate application, but on this occasion an exception is made. This is because the elimination of several taxes it would cause a normative vacuum, and would even have consequences in the income of the State.
“The immediate unconstitutionality of the entire Environmental Promotion Law would cause a great normative vacuum due to the very fact of the varied matters that it regulates. So, for example, a unconstitutionality An immediate decision could generate doubts about the functions of the Tax Policy Committee as the highest inter-institutional body in charge of tax policy or about the multiple reforms in tax matters made by the Law, an issue that would seriously affect legal certainty at the national level. In addition, his expulsion would generate severe consequences for the national economy against the sufficiency of collection, “says the sentence.
For this reason, a deadline is set until the end of 2023 for the President of the Republic to make the necessary legal changes and reforms to cover all the gaps left by the elimination of the Environmental Promotion Law.
Javier Bustos, a tax attorney and university professor, was one of the promoters of the demand for unconstitutionality. He explained between reforms that remain without effect are:
- deductions from tax for rent
- Tax unique to bananas of 2% on sales
- Budget allocation of VAT paid by GAD’s
- ICE fees (cigarettes and alcoholic beverages)
- Tax to plastic bottles
- Presumption of ISD in exports
- ISD exemption on dividends
- Creation of the Tax Policy Committee
- Labor participation in mining and hydrocarbon sectors
- Rise of Tax to Foreign Currency Outflow (ISD) from 2% to 5%
Busto pointed out that, for example, the ISD would have to go down to 2% if the executive does not issue a decree establishing the contrary until December 31, 2023.
In mid-2019, the Environmental Promotion Law was reformed to eliminate the so-called green tax. (JS)
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