The Council of Ministers reviewed the Proposed Law that amends the Personal Income Tax Code (“IRT”), approved by Law n. º 18/14, of 22nd of October, which was sent to the National Assembly for approval.
The most relevant changes to the IRT now proposed are the following:
1- IRT taxable earning
- The concept of income is to be broadened;
- Housing allowances will now be fully taxable (previously only 50% was taxable);
- Income distributed to the partners of a purely civil society, with or without commercial form, is excluded from the tax base
2- Applicable rates to the earnings of Group A (earnings from employment contracts)
- Increase of the exemption base from 35,000 Kz to 70,000 Kz;
- Increase in the minimum rate from 7% to 9%;
- Increase in the maximum rate from 17% to 25% (now applicable from 10,000.001 Kz).
3- Group B taxation rules (self-employed persons exercising a professional activity)
- Change in the rate and taxable amount, when the income is paid by entities with an organized accounting system - the IRT becomes due on the gross income at a 6.5% withholding tax rate;
- Application of a 25% flat tax rate (previously subject to 15%) to the income paid by entities without an organized accounting system, being the taxable base dependent on the type of taxable person that is earning the income.
4- Taxation rules of Group C (self-employed persons engaged in an industrial or commercial activity)
The proposal is to to apply the same regime as Group B and a new definition of the Minimum Profits Schedule is also proposed.
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