During the creation process of the Law for the Strengthening of Public Finances, the Ministry of Finance requested that the Global Income Tax be incorporated, which would be achieved by assessing a charge (percentage) on INDIVIDUALS AND LEGAL PERSONS engaged in activities for financial gain. This type of charge is applied on income, gradually and proportionally, with respect to the monthly amount of money that the taxpayer receives from their economic or work activities -regardless of their source-, as long as it is obtained locally.

According to the proposal, the income covered by this rule is that generated from work, returns on personal and real property, income from self-employment economic activities, as well as equity variations from potential capital gains. In short, all of said income is accumulated on the basis of gross income. This initiative also affects the activities for financial gain of banking entities and financial companies supervised and inspected by SUGEF. As per the taxation scheme proposed, in the event that any such income should be subject to a withholding -considered as a sole and definitive tax-, it will be deemed as a payment toward this tax, and integrated into gross income. The aim behind the foregoing is to increase tax collection for the government as, in some cases, there is an increase in the lower income tax rates paid at the present time.

The full legal effects of the law on the financial institutions covered are subject to the request by said organizations. In the case of individuals, the law may not have full force and effect in various specific cases. With regard to salaries, Article 1 of the law expressly states that: “In no event will any income contained in -and regulated by- Title II be integrated into taxable income, in accordance with the provisions of Title I of this law (Tax on profits)”. Title II of the Income Tax Law refers to the unique tax on income received from self-employees’ work, retirement or pension, or other remuneration for personal services, interest or dividends, none of which may be integrated either, considering that in almost or no case at all may the taxes be migrated into the corresponding tax as dictated in Chapter I, as per Article 1 Bis, Section 3c of the Income Tax Law, which states: “(Regarding interest and dividends) None of the following will be subject to the tax: c. Any public assets representing the interests in funds of an entity or belonging to an entity (dividends) and/or third-party capital transfers, or issued by entities supervised by the National Council of Supervision of the Financial System (CONASSIF), or investment fund shares, except that the taxpayer is able to demonstrate an effective connection with the activity for financial gain, as determined by the respective procedure, which virtually nullifies -save the taxpayer’s own decision- in the aforementioned exceptions to adhere to the proposed tax scheme for those taxpayers who are regulated financial entities.