Comments on the VAT implementation for workers

13 December, 2021
Comments on the VAT implementation for workers

The “Ultima Hora” website published that the Vice Minister of Taxation of the Undersecretary of State, Oscar Orué, explained that if a person works dependently, this will not be required to contribute to the State with the value-added tax (VAT).

1. VAT implementation

According to Orué, supermarket expenses are not deductible for VAT but only for individual income tax. Due to this, VAT should only be deducted for those expenses related to the rendering of services. Therefore, the dependent and contributor worker to the IPS (Instituto de Previsión Social – Social Security Institute) is not subject to this tax.

The Vice-Minister indicated that this situation often arises when the employer requires an invoice from the employee for the payment of his fees.

2. Background of the problem

Approximately 3 months ago, a discussion started regarding whether supermarket purchases are deductible or not for VAT purposes. In that confrontation, Orué announced that as of 2022, proper compliance with the application of VAT would be required.

Therefore, VAT controls will be tightened with the effective implementation of the electronic registration of vouchers for 100% of taxpayers as of January, which will automatically report non-compatible expenses with the services rendered by taxpayers.

Finally, it was concluded that the percentage of deducted purchases of food products is taxed at 5%, not justifying it by the service provider.

Source: UltimaHora 13/12/21