Chilean Congress Passed Tax Reform with Substantial Changes to the Chilean Tax System

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Ryan, LLC

Nov 18, 2014, 04:46 ET

DALLAS, Nov. 18, 2014 /PRNewswire/ -- On September 29, 2014, the Chilean Congress passed a significant tax reform. The enacted law includes substantial changes to the Chilean tax system. Among the main changes, the new law contains two alternative corporate tax regimes. The main changes should bring:

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Ryan is an award-winning global tax services firm, with the largest indirect and property tax practices in North America and the sixth largest corporate tax practice in the United States.
Ryan is an award-winning global tax services firm, with the largest indirect and property tax practices in North America and the sixth largest corporate tax practice in the United States.

  • Increase of the corporate tax rate
  • Changes on capital gain taxation
  • Restrictions for tax goodwill amortization and relevant amendments to the thin capitalization rules
  • Increase of the stamp tax rates
  • General anti-avoidance rules, as well as new requirements for the tax deductibility of related-party payments abroad

Regarding the alternative tax regimes, taxpayers will be allowed to choose between an Attribution Tax Regime that levies with a 25% tax rate income obtained by companies during the fiscal year that will be immediately allocated to their shareholders ("Regime A"), and a Partial Integrated Tax Regime that levies with a 27% tax rate income obtained by companies ("Regime B"). Under Regime B, shareholders are allowed to defer personal and withholding taxes until such profits are effectively distributed. However, it only allows using a 65% credit of the corporate taxes paid by the company (unless the shareholder is a resident in a tax-treaty country). Depending on the chosen alternative, the final tax burden of a non-Chilean investor may be 35% or 44.45%.

The approved tax reform will enter into force gradually, starting this year 2014 and finishing the full application in 2017.

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Ryan is an award-winning global tax services firm, with the largest indirect and property tax practices in North America and the sixth largest corporate tax practice in the United States. Headquartered in Dallas, Texas, the Firm provides a comprehensive range of state, local, federal, and international tax advisory and consulting services on a multi-jurisdictional basis, including audit defense, tax recovery, credits and incentives, tax process improvement and automation, tax appeals, tax compliance, and strategic planning. Ryan is a three-time recipient of the International Service Excellence Award from the Customer Service Institute of America (CSIA) for its commitment to world-class client service. Empowered by the dynamic myRyan work environment, which is widely recognized as the most innovative in the tax services industry, Ryan's multi-disciplinary team of more than 1,900 professionals and associates serves over 9,000 clients in more than 40 countries, including many of the world's most prominent Global 5000 companies. More information about Ryan can be found at www.ryan.com.

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TECHNICAL INFORMATION CONTACT:

Maria Menzel
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Ryan
+41 (0) 44 208 3765
[email protected]
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