Income tax Exemption for year-end bonuses in 2018

Dear Clients and Friends:

ROMERO PINEDA & ASOCIADOS

ROMERO PINEDA & ASOCIADOS, informs you that on October 24, 2018 the Legislative Assembly at its plenary session approved Decree number 160, which temporary provisions exempt from withholding and payment of income tax the year-end bonuses received by workers in accordance with the Labor Code and the Law on Additional Compensation in Cash, up to an amount not exceeding two monthly minimum wages in the trade and services sector (US$608.34).

The year-end bonuses that exceed the aforementioned amount will constitute taxable income and as a consequence will be subject of withholding and payment of said tax, deducting the two minimum wages referred.

In addition, we remind you that pursuant to Article 200 of the Labor Code, the year-end bonus must be paid between December 12 and 20 of each year.

For additional information and legal assistance on the requirements and form of payment, causes of loss of the right to pay year-end bonus and other Corporate and/or Labor matters, please feel free to contact Beatriz Merino (Coordinator of the Labor Unit), at (503) 2505-5555 or email: bmerino@romeropineda.com.

We will be pleased to assist you.

 

 

 

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