Chile enacts new tax reforms as part of Fiscal Pact

On October 24, 2024, Chile published Act 21.713 (the Act), which makes changes to the country’s tax legislation and establishes new rules to ensure compliance. The new legislation comes as part of the country’s pact for economic growth, social progress, and fiscal responsibility – or, the Fiscal Pact for Development.

Changes to Chilean tax law

The following gives a brief summary of the main changes brought into effect under the Act. The Act:

• Modifies the ability of Chile’s internal revenue services (Servicio de Impuestos Internos, or SII) to appraise the price or value assigned to the object of a sale or service, and therefore to establish a definition of "market value." The Act also establishes a definition of legitimate business purpose to clarify that power of appraisal does not apply to contributions of assets made in the context of a corporate group reorganization if the operation has a legitimate business purpose.


• Makes changes in the procedure and application of the General Anti-Avoidance Rule (GAAR). An executive committee will be created to evaluate the application of the GAAR and make recommendations on its application to the director of the SII.


• Establishes a new rule to fix the penalty interest rate applicable to taxes paid after the due date. A penalty interest rate of 1.5 percent per month (18 percent per annum) shall accrue on taxes paid after the due date, calculated by each day of delay.


• Establishes the figure of the anonymous whistleblower as part of tax crime investigations. Individuals who voluntarily collaborate with investigations into tax crimes, provided they meet certain requirements, will be entitled to receive 10 percent of the fine applied as a result of their collaboration.


• Facilitates audits of corporate groups and related entities. SII audits of business groups will include all their related entities, and rulings will affect the entire group.


• Changes the relationship standard to establish control of entities under the controlled foreign companies (CFC) regime regarding the recognition of passive income abroad. The relationship provisions set forth in Article 8 N°17 of the Tax Code shall apply to establish control over foreign entities. In this context, it will therefore be presumed that, unless proven otherwise, relations extend to spouse, civil partner, and ascendant or descendant relatives up to the second degree of consanguinity.


• Establishes a temporary tax amnesty, allowing taxpayers domiciled or residing in Chile to declare their foreign assets and income. This initiative will introduce a flat tax rate of 12 percent for individuals and entities established or incorporated in Chile before January 1, 2023. This applies to assets and income located abroad that have previously been subject to taxation in Chile but were not declared or taxed in a timely manner.


• Includes digital platforms as value added tax (VAT) taxpayers, aligning them with digital service providers and subjecting them to a simplified taxation regime.


• Modifies the VAT applicable to imports. Movable tangible property located abroad acquired by Chilean residents which are not VAT payers will be deemed to be situated in Chile and therefore under the scope of VAT application.

For more information, please contact the authors.

Leer este artículo en español.