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The Law 181/2025, approved by the National Assembly on December 18, 2025, establishes the State Budget for 2026 with gross revenues of 484,120.6 million pesos and a maximum fiscal deficit of 74,500 million, supported by a more stringent and discretionary tax scheme.
The document, published in the Official Gazette, outlines a system of 22 taxes that will support tax revenues of 349,429.9 million pesos and non-tax revenues of 134,690.7 million, in a context marked by inflation, a contraction in production, and the expansion of the non-state sector as the main revenue base.
Among the taxes on income and profits, the regulation maintains a general rate of 35% on profits, also applicable to local development projects.
In the case of the personal income tax, the progressive scale tightens up to 50% for those earning over one million pesos annually, a threshold that, in the current inflationary environment, can be reached even in medium billing activities.
Individual agricultural producers pay taxes through a fixed withholding of 2%.
In terms of consumption and sales, the law affirms the 15% as the general rate for retail sales and services, including small and medium-sized enterprises and non-agricultural cooperatives.
This includes a specific tax of 5% on telecommunications services provided by the Etecsa monopoly, which strengthens the role of consumption as a stable source of tax revenue.
Contributions to social security exert significant pressure. Employers pay 14%, of which 12.5% goes to the State Budget, while workers contribute 5% up to 15,000 pesos per month and 10% on the excess.
This is complemented by contributions such as the territorial contribution for local development, at 1% of gross income, the tax on the use of labor, at 5%, and the taxes on land idleness, which range from 225 to 900 pesos per hectare depending on the category.
More discretion in decision-making
Beyond the figures, the analysis of the text reveals a consistent broadening of ministerial discretion.
Several articles grant the Minister of Finance and Prices the authority to redistribute expenditures, adjust budgets throughout the year, and decide which goods or services will be subject to the special tax, without the need to return to the National Assembly.
This design introduces legal uncertainty for taxpayers by allowing changes to tax rules during the budgetary exercise.
Another gray area appears in Annex I, dedicated to the tax on land transport. The regulation divides the amounts into a "Group 1" and a "Group 2," but fails to explicitly define which subjects belong to each category.
Although this division has historically separated the state sector from the non-state sector, the absence of a legal definition creates an interpretative vacuum that hampers citizen oversight.
The imbalance between both groups is extreme. For all categories of vehicles, the amount required from Group two is exactly 25 times higher than that of Group one.
A motorcycle costs 110 pesos in the first group and 2,750 in the second; a car with up to five seats pays 260 compared to 6,500; and a truck or bus goes from 450 to 11,250 pesos.
Even animal traction used for public transport reflects the same multiplier, with 150 pesos for Group one and 3,750 for Group two.
In the case of heavy loads, the asymmetry is accentuated. While Group One pays a base rate of 1,000 pesos plus 75 per additional ton, Group Two faces a base rate of 25,000 pesos plus 1,875 per ton or fraction.
The only convergence is the total exemption for ambulances, funeral homes, and humanitarian institutions.
From a technical reading, the structure of the annex does not seem to correspond to studies of individual contributive capacity, but rather to the mechanical application of a fixed multiplier.
This confirms that vehicle ownership in the private sector is used as one of the most aggressive levers to offset the fiscal deficit of 2026.
Strategic silences regarding currency operations
The law also introduces strategic silences. Article 64 empowers the minister to make tax adjustments related to transactions in freely convertible currency, but it does not define mechanisms for collection or reference exchange rates, leaving the transparency of revenue collection in foreign currency unclear.
In contrast, the regulation explicitly suspends for 2026 the taxes on residential properties, lots, and agricultural lands, a decision aimed at alleviating social tensions regarding essential assets amidst the crisis.
Overall, Law 181/2025 consolidates a budgetary model that relies on increased tax pressure, particularly on the non-state sector, and a high degree of administrative discretion, shifting the main burden of a deficit that the text itself acknowledges as structural onto the taxpayer.
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