TIP – Let’s rescue the deductibility of retirement employer and evictionCategorie: Tips - July 27, 2018
Workers under dependent relationship that accumulates 25 years or more of service with the same employer, have the right to receive a monthly payment or a global fund for employer retirement. (Art. 216 and Art. 217 Code of work)
Also, workers will be able to finish employment relationship, through the eviction (Art.184 Code of Work), with the right to receive an economic bonus (Art.185 Code of Work)
Employers forced to carry accounting, to address the previously indicated post – employment benefits (IAS 19), are forced to register accounting provisions.
In the Law of Internal Tax Regime (LRTI), until the year 2017, it was recognized as deductible from income tax, the entire of provisions to meet the payment of eviction and retirement pensions, just if they are actuarially formulated and, for the latter, employees who has complied at least 10 years of work in it company.
This provision (Art.10, numeral 13 LRTI) was amended by the Organic Law for the Reactivation of the Economy, Strengthening Dollarization and Modernization of Financial Management (R.O.150-s2, December 29, 2017), which passes to condition the deductibility to the payment and no longer to the provision, with the following text: “13 – Payments made by way of eviction and retirement pensions, in accordance with the provided in the Labor Code, which does not come from provisions declared in Previous fiscal years, such as deductibles or not, for purposes of income tax, without prejudice of the employer’s obligation to maintain the necessary funds for the fulfillment of its obligation to pay the Eviction and retirement bonus patronal.”” Payments made by way of eviction and retirement pensions, in accordance with the provided in the Labor Code, which does not come from provisions declared in previous fiscal years, such as deductibles or not, for purposes of income tax, without prejudice of the employer’s obligation to maintain the necessary funds for the fulfillment of its obligation to pay the Eviction and the employer retirement bonus.”
For this reform (applies from 2018), employers are obligated to register provisions after employment, and are unable to take advantage of the deductibility of eviction and employer retirement, because it is foreseeable that its payment does not affect the result of the exercise, as it must first be applied to the provisions recorded in previous years.
That numeral 13 of Art.10 of the Regime Law Internal Taxer says:”13. The provision made by the employer for payment for eviction and retirement pensions or the fund of retirement, in favor of its workers under dependency relationship, as provided in Labor Code, actuarially formulated by companies specialized or professionals” The Law for Productive Development should correct this normative absurdity. It does not make sense that a true and necessary expense, that by accounting standard must be provisioned, its deductibility is conditioned to the payment that affects the result of the exercise, when it is known that this will not happen.
Wrote by: Pablo Guevara Rodríguez, Senior Partner Andersen