Deputies make changes to the 10% withdrawal: income of up to $ 1.5 million will not pay taxes and they lower the term to pay

Two relevant changes made this Wednesday the deputies of the Labor Commission to the government project to withdraw 10% of the AFPs. One of them has to do with the time that the AFPs will have to pay the withdrawal, and the other change points to the taxes that will be applied to people who ask for this money.

Specifically, the parliamentarians decided to lower the term in which payments will be made, despite the fact that the Executive insisted in the instance that a longer term was necessary, in large part because BancoEstado transmitted to the government the need to have at least 12 working days to be able to manage these amounts, and that there are also no crowds in branches to request the cash.

Although the government project said that the first payment would be made in 15 business days from the request, and the second payment in the 15 business days following the first disbursement, the deputies approved an indication from Deputy Gastón Saavedra (PS) by seven votes in favor and six against, which indicates that the first payment will be in 10 business days, and the second disbursement will be made in the following 10 business days. This, despite the fact that the Minister of Finance, Ignacio Briones, also recalled that the same Central Bank (BC) had asked for more time.

“Withdrawals, with a period of 10 days, is something that is problematic. We are going to replace this indication ”, said Minister Briones.

The second change was the one that so far generated the most controversy: taxation. The government yesterday opened up to people who earn between $ 700,000 and $ 1.5 million to be exempt from paying taxes when withdrawing the money. The above, after an agreement reached by the Executive with Chile Vamos.

The opposition wanted this tax exemption to be at least up to $ 2.5 million, so they said they were not satisfied with the indication that the government entered in that sense, but they approved it anyway. Thus, the change proposed by the government was approved by twelve votes in favor and one against.

The Minister of Finance said in the instance that this indication was presented because Chile Vamos requested it, and from the ruling party they thanked the opening to dialogue. The head of the Treasury also commented that “according to the latest estimate of the Internal Revenue Service, there are about 1.8 million people -which would be those who are in that income bracket, between $ 700 thousand and $ 1.5 million- that would be exempt from the income tax rate that they must pay, and that corresponds to a rate of 4% for each peso that goes over $ 700 thousand.

In the original government project, the projection was that 25% of those who withdraw would pay taxes, which translates into 2.38 million people. On the other hand, by setting the limit at $ 1.5 million, 965 thousand people would have to pay taxes, that is, 40% of the affiliates contemplated by the original government project. This means that 10% of contributors who can withdraw funds in their AFP will pay taxes.

This is why the total amount of collection would go from US $ 743.4 million to US $ 549 million, that is, 73% of what was originally going to be collected would be collected.

A third relevant change made by the deputies of the Labor Commission, indicates that if the amount requested is equal to or less than UF 35, it will be paid in full within a period of no more than 10 business days, that is, in a single installment . This indication presented by the opposition had eleven votes in favor, one against and one abstention. The AFPs had already said that they are willing to pay everything in a single installment for amounts up to UF35.

On the other hand, the deputies rejected the indication that the government entered so that the AFPs have the duty to inform the affiliates about the effect that retirement will have on their pension. This indication, which had already been rejected in the Senate, this time fell because it obtained six votes in favor, six against, and one abstention.

The parliamentarians also rejected the Executive’s indication that the withdrawn funds be reimbursed on a mandatory basis. This issue had also been rejected in the Senate, and this time it had one vote in favor, one abstention and eleven votes against.

This Thursday at 10:15 am, the House Finance Committee will vote on the initiative. Minister Briones announced that they will re-enter in this instance the indication of the mandatory reimbursement of withdrawn funds, which was rejected this Wednesday in the Labor Commission and which had also been rejected in the Senate.

Meanwhile, the chamber of the Chamber of Deputies will have a special session from 10:00 a.m. to 3:00 p.m., and in the third place of the table is contemplated the vote of the government project to withdraw 10%.

Additionally, the Senate room put this project in third place in the table for this Thursday, in the session that will be held between 10:00 and 12:00 hours, “provided that the respective official letter from the Honorable Chamber of Deputies and remain in a table state or have a report from the Finance Commission, if applicable ”.

Once a week the pension reform will be seen in the Senate Labor Commission, according to the president of the instance, Juan Pablo Letelier, said on Wednesday in a session that the parliamentarians carried out to see the conclusions that the government drew on the proposal by Senator Ximena Rincón (DC) to eliminate mortality tables. There Letelier pointed out that the idea is to advance the project “and close what we have to close,” he said.

In fact, they agreed to group the discussions into different topics, such as the public entity that will manage the additional price, changes to the AFP industry and its profits, among others.