Global

Details

  • Service: Tax, Global Mobility Services, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 8/14/2014

Chile - Tax bill amendments propose new corporate tax system 

August 14:  The Chilean government released official text of a bill to modify the proposals in the original tax reform legislation (as initially submitted to Congress in April 2014).

Background

The package of tax reform measures presented to Congress in April 2014 would overhaul the Chilean tax system—including the repeal a mechanism that allows for the deferral of taxation on reinvested profits of foreign shareholders (known as “FUT”).


Read a status update on the tax reform legislation from May 2014: TaxNewsFlash-Americas.


Pursuant to an agreement reached in July 2014 between the Senate and the government, it was agreed to make 278 modifications to the tax reform bill that was submitted in April 2014.

Overview of modifications

The modifications to the tax reform bill would:


  • Establish a new corporate income tax system under which taxpayers could elect between a system of attributed profits or apply a partially integrated system
  • Increase the rate of corporate income tax:
  • From 20% to 25% (to be phased in over the years until 2017) for taxpayers electing the attributed profit system
  • From 20% to 27% (to be phased in over the years until 2018) for taxpayers electing the partially integrated system
  • Apply thin capitalization rules based on a 3:1 debt:equity ratio
  • Limit interest expense deductions on acquistions of shares and other securities
  • Revise the treatment of goodwill for amortization purposes
  • Require information reporting of investments in Chile and abroad by corporate taxpayers
  • Revise the treatment of sales or tranfers of real estate by individuals
  • Provide an alternative for historical FUT and excess withdrawals
  • Make available a cash repatriation regime for one year (2015)
  • Revise the tax credit system for taxes paid to a foreign country under the CFC rules
  • Provide general anti-avoidance rules

    • Read an August 2014 report [PDF 80 KB] prepared by the KPMG member firm in Chile: Tax Alert (August 2014)




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