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Chile Hikes Corporate Income Tax Rate - by Alex Feness 

Global Tax Adviser

 

October 09, 2012

 

Alex Feness
Toronto, International Corporate Tax

 

Taxpayers with activities or investments in Chile will likely be affected by significant changes to the country's tax regime that were enacted on September 27, 2012.

The new legislation:

 

  • Increases the corporate income tax rate to 20%
  • Deems loans to shareholders as disguised distributions that are subject to a 35% tax
  • Changes the treatment of “upstream” loans from a Chilean corporate taxpayer to a related-party affiliate located outside of Chile
  • Modifies the capital gains tax rules relating to transfers of Chilean Limitada interests
  • Subjects indirect transfers of Chilean shares to capital gains tax
  • Introduces OECD-based transfer pricing rules
  • Allows for amortization of goodwill on reorganizations and mergers
  • Taxes foreign taxpayers with a branch or permanent establishment (PE) in Chile
  • Changes the rules for foreign tax credits
  • Changes the withholding tax rules
  • Reduces the stamp tax rate
  • Makes a tax exemption available for certain "standard" software
  • Revises individual income tax rates
  • Introduces an individual income tax credit for education expenses and tuition.

 

For more information, contact your KPMG adviser.

 

 

 

 

Information is current to October 9, 2012. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour 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 upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG’s National Tax Centre at 416.777.8500.

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