The Chilean government on 15 December 2015 sent to Congress a bill that would make changes to the tax reform legislation enacted in 2014. The current legislative proposal is intended to simplify certain aspects of the “2014 tax reform”—measures that have proven to be too complex to implement.
It is anticipated that the lower house would vote on the bill next week, and the Senate would then consider the bill in mid-January 2016.
The “2014 tax reform” introduced a number of significant changes to Chile’s tax system—including provisions that, among other items, revised the corporate and dividend taxation integration rules; made changes to the thin capitalization rules; modified the expense deduction rules; imposed limits on the deductibility of “tax goodwill;” enacted controlled foreign corporation (CRC) rules; and provided for a general anti-avoidance rule (GAAR).
These legislative changes also allowed for a set of complex transition rules.
Almost a year following enactment and publication of more than 1,000 pages of administrative guidance and interpretations on the application of the new tax rules, there is a consensus that certain aspects of the 2014 tax reform required simplification.
The bill introduced by the government is intended to achieve the desired simplification. Yet, government officials have indicated that the proposed simplifications would not result in a reduction of tax rates or of projected tax revenues, and basically the bill would not affect the redistributive changes that were at the core of the 2014 tax reform.
Some of the proposals in the bill that could affect investors doing business in Chile include the following:
The proposed legislation also contains several other changes and amendments addressing income taxes, value added tax (VAT), “green” taxes, among other items.
For more information, contact a tax professional with KPMG’s Latin America Markets Tax practice or with the KPMG member firm in Chile:
Devon M. Bodoh | +1 (202) 533-5681 | firstname.lastname@example.org
Alfonso A-Pallete | +1 (305) 913 2789 | email@example.com
Andrés Martínez | + 56 227 981 412 | firstname.lastname@example.org
Rodrigo Stein | + 56 227 981 412 | email@example.com
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