Tax Code – Other modifications

• The statute of limitations is extended or renewed, as applicable, by 12 months in cases of non-compliance with reporting obligations, when the non-compliance is aimed to avoid tax payment, conceal the taxpayer, or circumvent the application of a general or specific anti-avoidance rule.
• This scenario applies to taxpayers who fail to declare a tax or declare a lower tax resulting from the unreported modification, fail to file a sworn statement disclosing the modification, or when the omitted information is essential to classify an operation as tax avoidance or to apply a special anti-avoidance rule.
• The maximum statute of limitations period may not exceed 6 years.
• Certain entities are required to verify the initiation of activities for specific individuals.
  • All State administration authorities, regional governments, and municipalities must verify this for individuals who require authorization to conduct an economic activity, or where such authorization is part of the requirements for being authorized to carry out habitual economic activities.
  • Administrators, operators, or providers of electronic payment methods must verify this for those contracting their services for economic activities.
  • Digital platform operators that facilitate transactions between third parties for the acquisition of goods or services must verify this for the entities offering their products. This obligation may be waived if the individual declares that their activity is not subject to the business commencement obligation.
    
    These entities must report annually to the Chilean IRS, in the manner and within the term established by the respective resolution, the individuals and entities registered on the digital platform. For those who have declared that they are not required to initiate business activities, they must also report the number of transactions and the total amount of such transactions. Additionally, they must provide information, upon request, regarding the number of transactions and their total amount for specific taxpayers.

An obligation is established for all business groups to designate and inform a representative, who will be responsible for maintaining communications and coordination with the IRS, in order to implement prevention and collaboration measures.

Additionally, the IRS is granted the authority to apply a unified audit procedure involving all taxpayers within a business group who have participated in operations and transactions in Chile, when it is necessary to consider the effects of the audit comprehensively and coherently.

• It is established that the default interest rate will be determined according to the regulation in force at the time of the debt payment, regardless of when the taxable events accrued.
• The rate for penalty interest due to late payment of any tax or contribution, in whole or in part, has been modified.
  
  In this regard, the monthly penalty interest rate of 1.5% is eliminated and replaced by a daily penalty interest rate. This new rate will be determined based on the current interest rate applicable to operations of one year or more, adjustable in local currency, up to or equivalent to 2,000 UF (USD$ 82,000 approx.), published by the Chilean Securities and Exchange Commission, increased by 3.5%.
• In order to determine the penalty interest, the applicable semi-annual interest rate will be considered, which will be published by the Chilean IRS through a resolution.

• A new provision specifies that any regulation establishing sanctions must ensure that the final penalty, after any waiver, is proportionate to the type of tax noncompliance committed by the taxpayer.

Notification by e-mail is established as a general rule, except for certain cases where notification will be made personally, by registered letter or certified letter. Additionally, taxpayers are allowed to grant a power of attorney to carry out procedures on their behalf through the Chilean IRS website.

• Restructuring of the prohibition to initiate new auditing procedures: The Chilean IRS prohibition to initiate new auditing procedures is redefined, including not only facts already audited, but also operations and transactions previously reviewed.
• Period of certification: A 10-day period is established from the receipt of the information for the tax auditor to certify that all relevant materials has been provided. If not, the information will be considered as submitted, thus starting the computation of the audit period.
• Extension of deadlines: The audit period is extended to 18 months for audits related to (i) indirect sales, (ii) excess indebtedness, and (iii) application of the anti-avoidance rule of the Inheritance and Donations Law (art. 63). The periods of 12 and 18 months may be extended once for 6 months by means of a well-founded resolution, without the possibility of administrative appeal or judicial claim.
• Application of the general anti-avoidance rule (GAAR): If the application of the GAAR is determined during the audit, the taxpayer will be notified that the procedure will continue under that rule. Likewise, if new evidence is presented in response to the citation that reveals abuse or simulation, a new procedure may be initiated under this regulation.
• Unified audit procedures: The Chilean IRS is authorized to conduct unified audits for business groups, covering all taxpayers within the group that participated in the audited transactions.
• Multijurisdictional powers: Regional offices of the Chilean IRS will have the authority to audit taxpayers located in different territorial jurisdictions.

Mechanisms to modernize administrative procedures are introduced, leveraging available technologies. Email notifications and the use of electronic files are implemented.

• Jurisdiction: The competent court to hear claims in special cases is clarified (e.g., unified audits of business groups, audits involving taxpayers across multiple regional offices).
• Procedure for real estate valuation claims: The special procedure is eliminated, and such claims will now govern by general claims procedure.
• Modernization: Electronic files are adopted as the primary means for processing cases before the Tax and Customs Courts. Their registration, formalities, content, and exceptions for physical document submission are regulated. Notification by e-mail is implemented as a general rule, with exceptions.
• Modifications to the claims procedure:
  • Appeals will be allowed against resolutions that deny the reception of evidence.
  • Increased authority for conciliation is granted, eliminating restrictions on what can be subject to conciliation, except for procedures involving sanctions for tax offenses that do not involve custodial sentences.
• Precautionary measures:
  • The retention of specific assets is introduced as a precautionary measure applicable to all proceeding that allow it.
  • Pre-judicial precautionary measures (prohibition of acts on assets or retention) are regulated in procedures under Article 4 quinquies (general anti-avoidance rule) and Article 161 (non-imprisonment tax sanctions in the event of presumptions of tax debt non-compliance, except for taxpayers under the SME or presumed income regimes.
• Sanctioning Procedure: Modifications are introduced to enhance due process and the taxpayer’s right to defense in cases of non-imprisonment tax offenses.

• The penalty is increased for maliciously incomplete or false declarations that may induce the assessment of a tax lower than the tax owed, as well as for the use of fraudulent procedures intended to conceal or misrepresent the true amount of transactions or to evade tax payment (Article 97 N°4 of the Tax Code, first paragraph).
• For the fabrication, sale, or facilitation, under any title, of dispatch guides, invoices, debit notes, credit notes, or false receipts, with or without the Chilean IRS’s stamp, the penalty is set at medium-level minor imprisonment and a fine of up to 40 UTA. Furthermore, if these actions are carried out to commit any of the crimes listed in Article 97 N°4 of the Tax Code, the penalty increases to maximum-level minor imprisonment and a fine of up to 100 UTA (Article 97 N°4 of the Tax Code, first paragraph).
• A new sanction is introduced (i.e., a fine of up to 60 UTA, with a cap of 15% of effective capital) for taxpayers who, in the previous fiscal year, had revenues exceeding 50,000 UF and fail to exhibit or provide the requested documents in an audit procedure initiated in accordance with Article 59 of the Tax Code (Article 97 N°6 of the Tax Code).
• It is clarified that “clandestine commerce in any of its forms” is subject to sanctions, emphasizing that these penalties also apply when such activities are carried out through digital means (Article 97 N°9 of the Tax Code).
• The failure to submit electronic information to the Chilean IRS is explicitly included under Article 97 N°10 of the Tax Code (i.e., the failure to issue invoices, receipts, credit notes, debit notes, and dispatch guides in the manner required by law). Additionally, the penalty of closure is explicitly established, making it applicable to digital commerce. It is also specified that the authorization to issue tax documents can be revoked, and in cases of recurrence, the website may be temporarily suspended or access to the payment provider may be restricted.
• The use of transportation, machinery, or similar means, as well as the use of virtual or digital platforms through which activities are conducted, or the issuance of paper or electronic tax documents, is considered a violation of a closure order for the purpose of Article 97 N°12 of the Tax Code.
• A new penalty is introduced for the movement or transportation of goods without dispatch guides or invoices when: (i) there is knowledge, or should be knowledge, that the legal requirements for tax declaration and payment related to their production or commerce have not been met; (ii) the goods are fake; or (iii) their commercialization is prohibited. In these cases, the fine will range from 20% to 300% of one UTA, and the goods will be seized.
• A new tax crime is established, applicable to those who authorize invoice, receipt, or other electronic tax document folios, knowing that they will be used to defraud the Treasury. This crime is punishable by maximum-level minor imprisonment and a fine of up to 10 UTA (This crime replaces the one previously contained in Article 97 N°22 of the Tax Code).
• A new tax crime is created, punishable by maximum-level minor imprisonment, applicable to anyone who, having knowledge of an administrative or judicial proceeding aimed at determining or assessing tax liability or the judicial collection of tax obligations, executes acts or contracts that reduce their assets or increase their liabilities without any other economic or legal justification than to harm the tax administration or partially or totally frustrate the fulfillment of their tax obligations (Article 97 N°27 of the Tax Code).

• New measures are introduced to provide more flexibility for entering into payment agreements for overdue tax obligations.
  • The time period to grant payment facilities is extended from 2 to 3 years. In exceptional cases, taxpayers may be required to provide guarantees to ensure compliance.
  • Taxpayers under the SME regime can always access payment agreements of up to 18 months, with an initial payment not exceeding 5% of the total debt, and with interest and penalties fully waived.
• Interest waivers will not be granted to taxpayers convicted of bribery involving officials of the Chilean IRS, Customs, or the Treasury.

• Taxpayers who become aware of differences in their tax returns, which may be related to potential tax offenses or crimes, can file a self-report before the Chilean IRS, provided they meet specific requirements.
• Once the self-report is approved by the Executive Committee, tax differences will be determined, and the corresponding collection orders will be issued.
• Notwithstanding that the tax discrepancies cannot be subject to remission of interest and fines, payment agreement with the General Treasury of the Republic may be available.
• The collection orders issued under this procedure cannot be appealed through administrative procedures or claims under Article 124 of the Tax Code.

• The creation of an Executive Committee is contemplated, composed of the Director of the IRS, who will serve as its president, along with the Deputy Directors of Regulations, Auditing, and Legal Affairs. This body will have, among its functions, the authority to recommend or not the application of the General Anti-avoidance Rule, approve out-of-court settlements, and approve rewards for anonymous whistleblowers.
• An article is introduced that establishes the creation of the Tax Council, whose function will be to provide opinions on the IRS’s circulars that must undergo a mandatory public consultation process and on the IRS’s auditing strategies.
• The Council will be composed of: a) the Director of the IRS, who will preside over it, and b) four members appointed by the Minister of Finance from a shortlist proposed by the High Public Management Council, serving a term of five years.