The exemption term is to free a person from paying a tax. In fact, the exemption in tax terms is considered as a technique with which – without altering the tax elements such as the subject, the base, the fee, rate or rate – the obligation is reduced or released, as the case may be. of paying taxes to certain people, be they physical or legal.
Its objective is to establish an equitable distribution of the tax burden to increase the well-being of taxpayers and their economic capacity and, in the same way, to promote activities that are useful for the development of the country.
This tax legal figure applies for different reasons:
- Equity: each citizen must contribute to the payment of taxes based on their economic capacity; Thus, it is common that in taxes such as income , an exemption is established in the percentage to be paid of low wages; or that, in the case of value added tax (VAT) ,goods and services indispensable for families with less purchasing power are exempted from payment .
- Convenience: as appropriate or not the general application of the tax.
- Economic policy: according to the guidelines adopted by the Government.
As described above, exemptions are created to benefit taxpayers and consumers and may be temporary, but everything depends on the tax on which the exemption falls:
- If we talk about direct taxes, the subjects with minimum income do not pay and will have more income , which seeks to balance the economy.
- On the contrary, if we talk about indirect taxes, goods and services will have less tax burden and will be cheaper and more competitive in the market.
Characteristics and exemption classes
An exemption has a number of characteristics:
- It has an exceptional character, that is, it does not occur in a normal or ordinary way.
- It is linked to the existence of two rules : a first subject to taxation of certain cases and individuals, and a second that exempts some of them.
- The circumstance of having made the taxable event, this being what marks the birth of the tax obligation.
- The non-birth of the tax obligation.
Similarly, there are different kinds of exemption:
- Objective exemptions : they are granted by reason of the matter or object of lien, and prevent the birth of the tax obligation.
- Subjective exemptions : they claim that certain people are not obliged to contribute even if the obligation by law may be born; that is, certain individuals do not have to pay the tax.
- Temporary exemptions : those that produce the exclusive effect of the tax obligation only for a limited period, which is set at the time of its creation; In other words, the tax is not paid in a specific period of time.
- Permanent exemptions: they represent those that are not limited in time.
- Total exemptions: define those that prevent the birth of the tax obligation for certain events or for certain subjects; that is, the tax is not paid in specific circumstances.
- Partial exemptions: those that do not prevent the birth of the obligation, but reduce the amount of the debt ; Or, what is the same, you only have to pay a part of the tax.