Temporary Suspension of the Definition of Pension Plans 

October, 2012 -

Temporary Suspension of the Definition of Pension Plans (employees' deductible expenses) as those approved by the “Corresponding Authority” Provisional Suspension of mandatory use of Banking System to evidence Payments and Disbursements of Expenses Higher than Q.30,000.00


In the past, the Tax Administration questioned on a case by case basis Pension Plans administered by private Banks, as employees´ deductible expense. The main argument of Tax Authorities was that banks were really offering long-term bank account benefits, but not Pension Plans. Thus, through the introduction of an amendment to Section 37 of Income Tax Law, it was clarified that Pension Plans had to be authorized by the competent authority. On October 12, the Official Gazette published the provisional suspension issued by the Constitutional Court through which Sections 2  of  Decree 4-2012 is being adjourned until the Constitutional Court issues its final ruling settling the case. Thus, the paragraph auditioned to Section 37 of Income Tax Law, Decree 26-92 of the Congress, which established the nature and conditions that pension and retirement plans had to have, remains on hold.

 

The Constitutional Court has also suspended the amendment to Section 20 of Decree 20-2006, through which the requirement to use bank products to prove the disbursement and payment of cost and expenses higher than Q30,000.00 (US$3,750 approx.) was established, recovering full force the disposition to use bank products to prove the disbursement and payment of cost and expenses higher than Q50,000.00 (US$6,250 approx.) until the Court issues its final ruling.

 

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