New requirements focused on the development of a business
An expense is considered necessary to generate income when:
- It has an ability to generate income, either in the same or future years;
- It is related to the interest, development or maintenance of the business;
- It has not been previously deducted as a cost;
- It is paid or due during the relevant business year, and
- It is duly evidenced or justified before the IRS in the event of an audit
Regulations of certain particular expenses
- Expenses incurred in supermarkets and similar stores
Eliminates existing restrictions for the deductibility of expenses incurred in supermarkets and similar stores.
- Expenses related to vehicles
The prior qualification by the National Director of the Chilean IRS as deductible expenses of certain disbursements related to vehicles will require a well-based resolution.
- The restriction on the deductibility of interest expenses destined to the acquisition, maintenance or exploitation of assets that do not produce income subject to Corporate Tax is eliminated. Such interest will be deductible if it meets the general requirements for expenses.
- Donation of inventory not destined to commercialization, to non-profit organizations
Allows the deduction from the tax cost basis of merchandise of unviable commercialization, to the extent that the merchandise is delivered for free to non-profit institutions registered with the Chilean IRS, for the free distribution, consumption or use among low-income individuals or other non-profit institutions.
- Bad debt write-off
It makes the write-off of bad debts with unrelated debtors that are unpaid for more than 365 days more flexible, allowing their total deduction or a percentage thereof.
- Accelerated depreciation for taxpayers with average annual income equal or lower than UF 100,000
Applies to new or used fixed assets, by virtue of which the asset is depreciated considering a useful life equivalent to 1/10 of the normal useful life determined by the IRS.
Additionally, an instant depreciation is established for the acquisition of 50% of the fixed assets, new or imported, destined to investment projects, from October 1, 2019 to December 31, 2021.
- Work-related assignments to employees
Modifies the deductibility requirements for voluntary payments of work allowances and severances, eliminating the generality and uniformity criterion. It also authorizes the deductibility of various kinds of assignments insofar as they are directly related to the nature of the employees’ activity.
- Salaries paid to the company’s owners in compliance with reasonability standards
Modifies the requirements and eliminates the limits for the deductibility of salaries paid to company’s owners. It also regulates and allows the deduction of remuneration paid to the spouse or civil partner, under certain conditions.
- Severance payments made in the context of business and corporate reorganizations
Regulation of seniority acknowledgments made in the context of business and corporate reorganizations.
- Expenses incurred in instruction programs
Extends the deductibility of expenses incurred in training programs to those cases in which the programs are carried out through entities other than the one that receives the endowment.
- Expenses incurred in environmental requirements in the development of projects
Authorizes and establishes requirements for the deductibility of expenses incurred by virtue of environmental requirements imposed for the execution of a project or activity, or by virtue of voluntary environmental commitments made in the environmental impact assessments or statements.
- Compensations paid to clients that are not caused by negligence
Authorizes and establishes requirements for the deductibility of disbursements or discounts destined to the compensation of patrimonial damages to clients or users, ordered by supervising authorities in compliance with legal obligations that do not require proving the negligence of the taxpayer.
- Payments made by virtue of judicial or extrajudicial transactions or in compliance with penalty clauses
Authorizes the deductibility of disbursements agreed between unrelated parties, by virtue of judicial or extrajudicial transactions or in compliance with penalty clauses.
- New regulations to proportionate general expenses
Three methods are established to proportionate expenses and disbursements attributable both to taxable income and to non-taxable income or income exempt from final taxes.