The non-application of adjustment for inflation to the scale exempt from Income Tax (ISR) has taken billions of pesos out of the pockets of formal wage earners from 2018 to date, a situation that has mainly harmed what we could call salaried middle class from the country.
In other words, the State does not index exempt salaries with ISR for inflation, workers have been paying more for five years.
Estimates made by the economist Nelson Suarez on the impact of the annual non-indexation of the ISR-exempt scale that began in 2013, show that only in this year formal wage earners would see their disposable income reduced by some RD$10,424.2 million.
This significant decrease is explained by the fact that since 2018 the adjustment for inflation has not been applied to the scale of net taxable income as established in Title II, Chapter VI, Article 296 of the Law 11-92 of the Tax Code.
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The adjustment for inflation of the net taxable income scale that had been applied Until 2012, it was interrupted by Law 253-12 on “Strengthening the State’s Collection Capacity for Fiscal Sustainability and Sustainable Development”. That it suspended for three years and until 2015 the adjustment for inflation of the net taxable income scale through which the income exempt from ISR of natural persons (ISRPF) is set, within which wage earners are included.
Between 2013 and 2015, the annual amount of RD$399,923.00 remained exempt from ISRPF, which was equivalent to a monthly salary of RD$33,327.00. Upon completion of the period for suspension of the adjustment for inflation in 2015, the annual amount exempt from ISR for 2016 was set at RD$409,281.00, which is equivalent to a monthly salary of RD$34,107.00, which was raised to RD$34,685.00 in 2017 (RD$416,220.00 annually) and maintained at this value to date.
Accumulated inflation between December-2017 and July 2022 is 26.68% which has not been applied to adjust the ISRPF-exempt scale to the detriment mainly of formal wage earners whom employers withhold at source by deducting from their employees’ salaries each month the ISR obligations on the net taxable salary that results from subtracting from the gross salary charges for contributions to the Social Security Treasury (TSS).
The ISRPF exempt scale of RD$416,220.00 represents a monthly salary exempt from ISR of RD$34,685.00, which is 25.15% lower than the RD$43,407.00 per month that it would be if the adjustment for inflation had been applied annually to the ISRPF scale between 2018 and 2022.
The exempt monthly salary of RD$43,407.00 would be equivalent to an annual amount of RD$520,884.00, which means that around 500,000 formal wage earners will see some RD$10,424.2 million disappear from their pockets this year, a respectable figure and that in a context of high inflation it has a relevant connotation for those who depend on a salary to meet their daily needs.
Of the total number of registered employees as of March this year, distributed by age range and salary range,
