The project of Labor reform that the president Javier Milei Set to pass in the Senate in February, not only establishes but also implements important changes to compensation, salaries and vacation Changes and reductions in taxes which mainly reach Company, Owner of Houses for rent, automobiles and telephone servicesamong other things.
The statement of the Senate Working Commission on the draft “Work Modernization Act” is divided into 26 titles with 212 articles and in last part of the textin the Titles XXIV and XXVThe government made a number of changes to the income tax, a change to the specific VAT for agriculture and a reduction in domestic taxes on six goods and services.
Both chapters will have a special place in the political discussion because the collection of these taxes is divided between the nation and the provinces. Governors and some senators have already targeted this point, although the ruling party is confident of reaching the necessary agreements. If the law is passed (which must also be passed by MPs), at least six changes would be made, four of which would be in the area of profits.
Labor reform: the two most important changes in corporate profits and rents
Some of the most important tax changes proposed by labor reform concern the income tax paid by companies. Firstly, Article 186 of the project refers to the Loss update and finds that the Losses incurred in fiscal years beginning on or after January 1, 2025 will be updated using the Consumer Price Index (CPI).
The mechanism is intended to allow legal entities to better offset losses related to inflation. Currently, if a company lost a million pesos in 2023, it can deduct the same amount in 2025 when it already amounts to less. For the update is the Variation of CPI “operates between the closing month of the fiscal year in which it is incurred and the closing month of the fiscal year in which it is settled.”
An important one second amendment This tax benefits owners of houses and apartments for rent. Article 188 includes among the tax exemptions “profits from the rental of real estate for residential purposes” for financial years or years beginning on or after January 1, 2026.
The benefits will also reach them Real Estate Salesas the project stipulates that “the result of the alienation of real estate and the transfer of rights to real estate in accordance with the provisions of Article 99 of this Law, alienated or transferred from January 1, 2026, is also exempt from tax.”
Tariff reductions and exemption from fixed terms: who do they reach?
The third modification The tax situation raised by the project, including on profits, is contained in Article 190 of the Opinion lowers the rates for “corporations” on the highest scales: those You pay 30%, it would go down to 27% and those who If taxed at 35%, the tax rate would increase to 31.5%.
He fourth amendment is another exception, in this case for Interest on deposits at banks. Currently those from “savings accounts, special savings accounts, fixed term in local currency and third-party deposits or other forms of fundraising from the public,” pursuant to Article 26, paragraph h) of the Income Tax Law.
The change proposed in the tax chapter of the labor reform is subtle: In this section, the expression “with a fixed maturity in local currency” is replaced by “with a fixed maturity”, which includes, among the tax exemptions, interest on deposits of this type in dollars or another currency.
Cars, boats and telephones without internal taxes: the other important changes in labor reform
On the other hand, the project proposes in its article 185 a VAT exemption for the provision of electrical energy that is used in Irrigation systems for the agro-industrial sectora modification by which the government attempts to favor the sector of the economy that generates the most dollars.
The scope of the Sixth Amendment is broader and is proposed as the central focus of Title XXV “Reducing the tax burden.” Article 191 proposes to exempt mobile phone services, cars and boats, among other things, from domestic tax from the month following the law’s entry into force.
“Leave without effectfrom the first day of the month immediately following the entry into force of this Law, the tax provided for by the Law Tax lawText replaced by Law No. 24,674 and its amendments, for the points: InsuranceThe Cellular and satellite servicesThe Luxury objects and vehicles Automobiles and engines, boats Recreation or sport and Airplane” says the text.
Why is the tax chapter causing a stir in the Senate debate on labor reform?
These tax changes have already sparked a controversy over the treatment of the project in the Senate, adding to the debate already sparked by the key issues of “work modernization,” the possibility of linking salary increases to productivity and the greater importance of per-company agreements compared to common agreements by sectors or categories.
Days ago, the Federal Conviction bloc, which includes Peronist governors far from Kirchnerism, warned that the national constitution requires this “Contribution laws” are always first dealt with in the Chamber of DeputiesTherefore, the Senate should not begin its debate.
The ruling party is downplaying the significance of the proposal because In his favor is the argument that new taxes are not created but rather changed, a logic that the Senate has accepted in previous debates. However, some governors expressed concern about the impact of these exemptions and changes on their provinces’ coffers.
For example, income tax is one of those that carries the greatest weight in the interaction between the nation and the provinces. In the Senate, they expect that some provincial leaders will demand “either changes (in the project) or compensation” for the possible decline in provincial revenues. It will show.
The concrete thing is that if the government of Javier Milei Reaches the necessary agreements to approve the project so that it is presented first in the Senate and then in the Houses of Representatives Labor reform would see the light with significant changes in both Result as in internal taxes and VAT, At least for some specific sectors.
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