Learn about the First and Second Category income taxes
Category taxes apply to the income from specific activities, such as
manufacturing, trade, mining, and real estate (First Category Tax with a variable rate), and;
income from employment contracts (Second Category Tax with progressive rates).
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.
First Category Tax | SME Regime (Full integration) | General Regime (Partial integration) |
---|---|---|
Second Category | Self Employed | Employees |
---|---|---|
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.
0 - 40%
0 - 40%