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 | email@example.com
Alfonso A-Pallete | +1 (305) 913 2789 | firstname.lastname@example.org
Andrés Martínez | + 56 227 981 412 | email@example.com
Rodrigo Stein | + 56 227 981 412 | firstname.lastname@example.org
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.