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Chile: Tax Reform Approved and Pension Reform, Send to Congress
Intense work continues to develop the Chilean Congress since the social outbreak. After a year and a half of discussions, important tax changes were authorized, in addition to the Anti-Sacking Law. At the same time, progress is being made in the discussion of the Pension Reform, which has been already send to the Senate.
At the end of three months of the social unrest, in an attempt to emerge from the current situation, Congress passed 10 bills, of which eight were Presidential messages and two, Parliamentary motions.
Experts believe that, despite the e ort done, this is not enough, since the climate of tension and public disorder remains in the country. In spite of everything, progress is being made in important proposals presented by the Executive, even a year and a half ago.
The main initiatives are:
Tax Reform
The Senate authorized, nally, the project promoted by the Government, after 18 months of discussions, leaving it ready to be promulgated. This law marks a milestone, as it is the rst emblematic Reform of the Executive that manages to be approved in Congress.
Thus, the bill, which underwent signi cant changes throughout the processing, considers a higher tax collection of USD $ 2.2 billion in regime.
The future law highlights:
• Large Companies: The tax system is simpli ed with a single semi-integrated scheme that sets a tax rate of 27 percent, eliminating the coexistence of the three current parallel regimes that hinder the administration and compliance with tributary obligations.
• Integration and Pro Pyme Regime: As of this year, this system will establish a corporate tax rate of 25 percent with total integration between personal and corporate tax for companies with annual sales up to USD $2.625.000. On the other hand, companies that exceed this threshold will be charged at a rate of 27 percent and shall maintain a partial integration of 65 percent between the First Category and the Complementary Global. Likewise the
rate of Provisional Monthly Payments (PPM) for micro, small and medium enterprises is reduced from 0,25 to 0,20 percent.
• Dedecom: From 2020 on and gradually, the Taxpayer Ombudsman’s O ice (Defensoría del Contribuyente, Dedecon) will begin to operate, which will have the power to represent lower income taxpayers, asserting its observations to the Internal Revenue Service (Servicio de Impuestos Internos, SII). • Fut: Until 2022 a transitional window is opened to withdraw accumulated resources from the historic Taxable Pro t Fund (Fondo de Utilidad Tributaria, FUT), at a single rate of 30 percent. The measure will raise USD $ 437 million this year.
• Extrajudicial Agreements with the Tax Authority: The Reform opens the possibility, from this year until 2021, to celebrate an agreement in all the trials that are pending today, with a remission of 100 percent of the interests and nes, but not of taxes due, which will have an impact on the collection
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