The following are the principal amendments to the income tax withholding provisions:
- The withholding tax for services is increased from 7% to 10%.
- The $1,500 withholding exemption is decreased to $500.
- The partial income tax withholding waiver increased from 3% to 6%.
- The exemption for the entities beginning operations for the first three years is reduced to only the first year of operations.
- A new quarterly return is introduced to reconcile the expenses with the withholding taxes.
The Tax Reform extended the informative returns requirements in order to include all individuals and entities that provide services. Now, the informative returns must be issued to any entity providing specified services or activities. The following payments that before the Tax Reform were not required to be informed are now subject to reporting:
- Insurance premiums
- Advertising
- Communication services and
- Cable or satellite T.V.
Informative returns for services are now required in order to claim the expense for income tax purposes.
