On January 18th, the Official Gazette published the Financial Inclusion Law amending the previous version of the Act 19.210 [1] covered in Progreso 14.

This law, which regulates the electronic payment system, not only makes changes to the Financial Inclusion law, but also amends the structure of social security provisioning and the maximum interest rates stipulated under the Usury Law. The most important points are the following:

Amendments to Act 19.210

• This acknowledges payments made with electronic payment systems. For electronic fund transfers, the payment is recognized at the moment in which the sum transferred is effective in the destination account.
• It makes the payment and receipt of retirement and other pensions, as well as withdrawals, much easier. Beneficiaries will have the option of receiving these payments in cash, as well as receiving them as credits in financial institutions or electronic money instruments. The same goes for beneficiaries of family allowances, subsidies, temporary indemnity payments and incomes for permanent incapacities.
• The amendments require financial intermediaries and those issuing electronic money to set up at least one mechanism that lets beneficiaries make a single monthly withdrawal at no charge of all the accredited funds to pay workers' wages, professional fees or charges for personal services, among others.
• It enables beneficiaries of food subsidies to choose freely the institution where they want to receive such benefits and to change the institution they have chosen after a year if they so wish. If workers do not exercise the option, the employer may do so on their behalf.

Amendments to the Social Security Law

The law also amends the exemption system [2] that applies when calculating personal wealth tax. The following items are not subject to taxation nor do they count towards the tax base:

• Allowances, in kind or in cash, up to a maximum value of 150 indexed units [3] (IU) per day worked, falling to 100 IU from January 1st, 2020.
• Medical or dental coverage costs - granted to workers or their family members - cost of the worker's life and accident insurance policies, as well as transport expenses, when the payment of these has been assumed wholly or partly by the employer.

In any event, the sum of all the exempt provisions may not be more than 20% of the monetary wage received by the worker for taxable items. This threshold will gradually go down: from January 1st, 2020 onwards, the limit will be 15% and, from January 1st, 2021, it will fall to 10%, with the excess over these thresholds being taxable.

Amendments to the Interest Rates & Usury Law

There is a new interest rate ceiling for credits for which payment is received through retentions on wages. The current maximum interest on average rates for payday loans is 20%, to which is added a 30% maximum on the average rates for other transactions, while a maximum of 80% (on top of the average interest rates) on delinquent interest is left unchanged.