Amendments to the tax system

First Category Tax (“Corporate Tax”) determined based on full accounting records (Article 14 A)
  • Corporate Tax rate of 27%
  • Full Corporate Tax imputation against final taxes payable at the owner’s level
    1. 100% of the Corporate Tax paid by the Company may be credited against the corresponding Personal Income Tax or Withholding Tax (“WHT”) payable at the owner’s level.
    2. Maximum overall tax burden: 35%.
  • Tax ledgers
    1. Redefinition of tax ledgers that must be carried by the companies (RAI, DDAN, REX and SAC).
    2. Elimination of the STUT ledger and application of TEF rate to former credits.
  • Tax imputation rules applicable to dividend distributions, profit distributions and capital reductions
    1. Application of current tax imputation rules, but the imputation must be made according to the balances registered at the end of the business year.
    2. Possibility of imputing a distribution to a tax free-capital reduction, even if at the date of the distribution the corresponding capital decrease was not formalized, to the extent that the respective capital decrease is subsequently executed.
  • Determination of credits to be applied
    1. Maximum amount of credits available is determined based on the amounts registered in the SAC ledger at the end of the business year.
    2. New average driver to determine the credit applicable to dividend and profit distributions.
    3. New rules for offsetting income and inadmissible credits.
Taxation applicable to taxpayers that declare their Corporate Tax without full accounting records (Article 14 B)
  • Corporate Tax rate of 25%
  • Final taxes applicable
    1. Owners are subject to the corresponding final taxes on the same business year to the one when the income is obtained (whether the taxpayer is under an effective or presumed income regime).
  • Full Corporate Tax imputation against final taxes payable at the owner’s level
    1. 100% of the Corporate Tax paid by the Company may be credied against the corresponding Personal Income Tax or WHT payable at the owner’s level.
    2. Maximum overall tax burden: 35%.
SME Regime (Article 14 D)
  • Corporate Tax rate of 25%
  • SME concept
    1. Annual gross income not higher than UF 50,000 (app. US$ 2,060,000) or tax-adjusted equity not higher than UF 60,000 (app. US$ 2,470,000).
    2. Related-party control rules applicable to determine the aforementioned limits.
    3. Limits to income derived from the following activities, which must not be higher than 35% of the year’s gross income: (i) any of the activities described in Nos. 1 and 2 of Article 20 (except for income derived from the having or exploiting agricultural real estate property); (ii) participation in unincorporated joint-ventures agreements; and (iii) holding shares, equity interests and fund quotas.
  • Tax base determination
    1. Based on full accounting records.
    2. Income recognition on a cash-received basis.
    3. Deductibility of expenses paid at the end of the year.
    4. Monetary correction rules must not be applied.
    5. Taxpayers must not keep the DDAN ledger.
    6. Instant depreciation rules apply.
  • Rules to apply for SME Regime
    1. Incorporation to the regime ipso iure in case of companies that initiate their activities and fulfill the requirements.
    2. Already incorporated entities must request their inclusion in the regime by means of a notice to the IRS delivered between January 1st and April 30th of the year in which they want to be included.
  • Tax compliance rules
    1. Obligation to file and pay the corresponding Corporate Tax and final taxes according to a proposal made by the IRS.
    2. Fixed monthly provisional payment (“PPM”) rate of 0.25%.

Jaime Carey
Managing Partner
+56 2 2928 2224
jacarey@carey.cl
Jessica Power
Partner
+56 2 2928 2214
jpower@carey.cl

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