This summer, Chile’s Congress received a tax reform proposal which included many provisions on income, foreign entity, and individual taxes, as well as VAT. The goal of the tax bill is to collect more taxes and reduces cases of tax evasion.
In the bill, it is suggested to extend the simplified VAT filling procedure for digital service providers so that foreign service providers can use it too. The simplified VAT filling in Chile includes access to an online platform, which allows submitting VAT details and remitting the tax easier.
It is also stated that more attention should be paid in order to capture remote digital services that should be taxed with VAT. According to the proposal, a territorial legal presumption for services should be used based on information like the IP address.
Among other means to collect more VAT is the establishment of a new anti-avoidance measure which could allow Chile’s tax authority to restate share deals as asset deals and add VAT in cases when the transferred entity receives over fifty per cent of its value from fixed assets.
Finally, it is planned that export VAT refunds should be limited to nineteen per cent of the value of the exported goods and/or services.
Other proposed measures include tax returns caps for individuals, mortgage interest deductions, a new wealth tax, exit tax, and new taxation systems for corporate taxes.
If the bill is passed, it will come into power the month following its official publication, with certain provisions to be implemented in 2024, 2025, and 2026.