please refer to its own section in the following link.
- The brackets and rates of the personal income and second category tax are modified, starting with the middle brackets applicable to those with monthly income over US$ 4,000, approx. The new maximum marginal rate would be 43%, which would apply to those with monthly income over US$ 8,000, approx.
- The following table reflect the referred amendments:
| Current situation | Tax reform proposal | ||
|---|---|---|---|
| Bracket (monthly tax units) | Marginal rate | Bracket (monthly tax units) | Marginal rate |
| < 13,5 | Exempt | < 13,5 | Exempt |
| 13.5 – 30 | 4% | 13,5 – 30 | 4% |
| 30 – 50 | 8% | 30 – 50 | 8% |
| 50 – 70 | 13.5% | 50 – 70 | 13,5% |
| 70 – 90 | 23% | 70 – 90 | 26% |
| 90 – 120 | 30% | 90 – 110 | 35% |
| 120 – 310 | 35% | 110 – 140 | 40% |
| > 310 | 40% | > 140 | 43% |
- The differentiated treatment of income received by certain political authorities in the country is eliminated.
- Entry into force: 2023.
- Capital gains obtained in the sale of share or corporate rights, mining properties, water rights, bonds and other debt securities, and real estate located in Chile, will be taxed on an accrual basis instead of a cash basis.
- The 10 monthly tax units (US$ 7,000 approx.) of non-taxable income is eliminated with regards to capital gains obtained in the sale of the aforementioned instruments.
- Only individuals with domicile or residence in Chile will be able to take advantage of the 8,000 foment units (US$ 265,000 approx.) of non-taxable income associated to capital gains obtained in the sale of real estate.
- The credit against the tax on capital gains obtained in the sale of real estate, coming from the inheritance tax paid when acquiring such property by inheritance, is eliminated.
- Entry into force: 2023.
- The rental payment for housing intended for residential use may be deducted from the personal income tax taxable base. Maximum limit: 8 monthly tax units (US$ 465 monthly, approx.).
- Expenses associated with payments for the provision of care services for (i) individuals under 2 years of age, and (ii) individuals with severe degree of dependency, may be deducted from the personal income tax taxable base. Maximum limit: 10 monthly tax units (US$ 580 monthly, approx.).
- Taxpayers with income below 150 monthly tax units pers year ($ 8,700 monthly, approx.) may make use of these benefits.
- Entry into force: 2023.
- Deduction of 10% of the annual income received from the rental of non-agricultural real estate for housing purposes from the tax basis of the personal income tax.
The inclusions and eliminations marked in color correspond to indications presented to the original project.
- The possibility of deducting interest from mortgage loans from the personal income tax taxable base is limited to 1 loan only.
- General limits are established for the deduction of tax benefits from the personal income tax:
- Expense deduction with an annual limit of 23 monthly tax units (US$ 16,000 approx.).
- Deduction of exempt income (except for the newly established capital gains tax) and credits (except for the corporate income tax) with an annual limit of 2.3 monthly tax units (US$ 1,600 approx.) or 50% of the determined personal income tax before the deduction of these benefits.
- Entry into force: 2023.
- The concept of donation is broadened to include revocable donations (currently only irrevocable donations are included). This implies that donations made between spouses, which are always revocable, and which under the current law are not subject to gift tax, will now be subject to such tax.
- The donation tax exemption incorporated in the last tax reform, which benefits donations made by individuals with taxation-complied income under the Income Tax Law (up to 20% of the donor’s global gross income and with an annual cap of up to 250 UTM – US$ 15,000 approx.), would be removed. The exemption from the insinuation procedure that currently favors such donations would be also removed.
- The valuation rules for the purpose of determining the tax base are modified, establishing fair market value (“economic value”) as the general valuation principle. For example, in the case of shares or social rights of companies that do not have audited financial statements, a valuation of their underlying assets shall be made. For the valuation of real estate, the tax appraisal (avalúo fiscal) is maintained as a criterion.
- The time limitation of up to 60 days for Chilean IRS to require a taxpayer and exercising its appraisal powers in the case of assets valued according to their fair market value and for which the immediate remittance of the tax was requested would be removed.
Entry into force: as of the first day of the month following the publication of the law.
