- The exclusion rule in cases of the sale of entities under preferential tax regimes with underlying assets in Chile is restricted, establishing that the same shall apply provided there are no individuals domiciled or residing in Chile who, directly or indirectly, and under any title, own 5% or more of the shares or rights of the entity being sold.
Effective Date: as of the first day of the month following its publication in the Official Gazette.
- The “arm’s length” principle is explicitly incorporated as a compliance standard, notwithstanding that the current regulation already reflects this principle and it is the standard used by the Chilean IRS.
- Modifications to the concept of related parties:
- All transactions carried out with parties domiciled or residing in countries listed as tax havens will be presumed as transactions between related parties, regardless of whether they belong to the same corporate group.
- The reference to individuals is eliminated.
- Transfer pricing adjustments:
- In order to establish whether a transaction meets the arm’s length conditions, the Chilean IRS may determine a single figure, or two or more comparable prices or returns. In the latter case, an inter-quartile range will be used, and values outside this range will be considered non-market.
- If the taxpayer accepts the Chilean IRS adjustment and rectifies its annual tax return, any figure within the interquartile range can be agreed upon. However, if the Chilean IRS issues an assessment or resolution, only the median can be used.
- It is clarified that transfer pricing adjustments will not have any effects on taxes other than income tax.
- Modifications regarding advance transfer pricing agreements:
- A new voluntary stage of known as “consultation” (i.e., prefiling meetings) is created, in which a preliminary administrative analysis of the agreement’s feasibility is carried out.
- The time frame for the Chilean IRS response is extended from 6 to 12 months, and the agreement’s validity is increased from 3 to 4 years.
- Taxpayers must submit an annual report on compliance with the agreement.
- Taxpayers are allowed to make self-adjustments to transfer prices without the Chilean IRS intervention if they do not comply with the arm’s length principle. These adjustments may be made as long as they result in an increase to the taxpayer’s taxable base, will not require authorization from the Chilean IRS, and will only affect income tax.
- A provision is incorporated in the Customs Law that establishes that the adjustments or self-adjustments in transfer pricing matters will not produce effects in the values declared in an import or export destination, nor will it be necessary to modify these values.
Effective date: as of the first day of the month following its publication in the Official Gazette.
- The relationship rules are extended for the purpose of determining the control of entities abroad, making the relationship rules of the Tax Code applicable. In addition, presumptions of relationship are established with respect to the spouse, civil partner or ascendant or descendant relatives up to the second degree of consanguinity. Under specific circumstances, a presumption of relationship with siblings is also established.
- Regarding the 2,400 UF threshold:
- Taxpayers must also calculate passive income accrued or received by related persons or entities to determine whether they meet the threshold.
- The threshold will not apply if the passive income originates from a controlled entity domiciled in a country or territory with a preferential tax regime.
Effective date: as of January 1, 2025.
- Current text of article 41 H is replaced, modifying the grounds for a jurisdiction to be considered a preferential tax regime.
- A jurisdiction will be considered to have a preferential tax regime if it meets the following cumulative requirements: (i) It has not entered into an agreement with Chile that allows the effective exchange of information for tax purposes, or such an agreement is not in force, or if it is in force, it contains limitations preventing effective information exchange; and (ii) It does not meet the conditions to be considered compliant or substantially compliant in terms of transparency or exchange of information for tax purposes.
- The reference to the non-application of the article to OECD member countries is eliminated.
Effective date: as of January 1, 2025.
