Category Taxes

Learn about the First and Second Category income taxes

Category taxes apply to the income from specific activities, such as

1. manufacturing, trade, mining, and real estate (First Category Tax with a variable rate), and;

2. income from employment contracts (Second Category Tax with progressive rates).

First Category Tax Rates

First Category Tax	SME Regime (Full integration)	General Regime (Partial integration)
	25%	27%
	Small and Medium Enterprises are those with an invoicing as a group of less than 3M USD per year.	In this regime, you can only use 65% of the corporate tax as a credit for final taxes.

For years 2020, 2021, 2022 and subsequent, a 10% rate for SME is applicable

Without prejudice to the above, the current tax reform bill ("Tax Reform") proposes the application of a reduced rate of 13% for First Category Tax on the income earned by small and medium-sized enterprises (SMEs) during the 2023 calendar year. This proposal should be closely monitored due to its potential impact on SME taxation.

Second Category Tax Rate

Second Category	Self Employed	Employees
	0 - 40%	0 - 40%