Chilean Tax Reform

Tax Reform 2020

After almost two years of legislative discussion, Law No. 21,210 was published last Monday, February 24, with the objective of modernizing tax legislation. In order to facilitate its understanding, the following is a description of the main reforms incorporated.

Updates

December 18th, amendments

In order to materialize the “memorandum of understanding” reached by the Chilean Finance Ministry and the Senate Finance Committee on December 18, 2019, the amendments to the Tax Modernization Project were presented for their legislative discussion, which are focused on SMEs, entrepreneurship and economic growth.

If the Tax Modernization Project is approved by the Senate,  it will be sent back to the House of Representantives, as the originating Chamber. Once the amendments made by the Senate are approved by the House of Representantives, the bill will be sent to the President of the Republic to proceed with the final procedures of approval, enactment and publication of the law.

May 8th, amendments

• General anti-avoidance rule (“GAAR”)
• IRS assessment authority and tax-free reorganization rules
• Taxpayers’ rights
• Conflict resolution procedure before the IRS
• Settlements during tax litigation and weight of evidence
• Others regulations

Bill´s Proposals

• Amendments to the tax system
• General anti-avoidance rule (“GAAR”)
• Expense deductibility
• VAT Law
• Foreign investors
• Taxation on individuals
• Audits and taxpayers´ defense
• Appraisal authority and tax-free reorganization rules
• Foreign investments made by Chilean-residents
• Financial operations
• Tax compliance
• Digital Services
• Special Programs
• Non-profit organizations
• SME’s tax system
• Green Tax
• Estate and gift tax