The Tax Compliance Law, a new regulation designed to strengthen the Internal Revenue Service’s (SII) actions in the fight against tax evasion, informality, and organized crime, was published in the Official Gazette on Wednesday, October 24.
The new law introduces a series of legal modifications to curb tax non-compliance and reduce tax evasion. Among the main measures are changes in the General Anti-Circumvention Rule, greater control of Business Groups, the application of VAT to purchase imported goods through digital platforms, and the obligation to report the number of transfers.
In addition, this law includes reforms aimed at improving the governance of the SII, with the creation of a Tax Council that will evaluate circulars submitted to public consultation and a Tax Compliance Management Plan. An Executive Committee, headed by the Director of the SII and made up of Deputy Directors of Regulations, Taxation, and Legal, will be responsible for deciding on the opening of investigations in cases of anti-avoidance violations.
The legislation will also introduce multijurisdiction and a simplified judicial procedure for lifting bank secrecy, measures that will strengthen the SII’s capabilities in detecting and prosecuting illicit activities.
To keep taxpayers informed about the scope of these regulations, the SII has set up a special section on its website, which will be updated periodically. Here, taxpayers can find details about the initiatives, their effective dates, and useful tools related to the new law.
Below is an overview of the main changes:
Luxury Tax Modifications and New Tax Regulations
The government has decided to implement significant changes in the legal framework related to the Luxury Tax to solve existing problems in its application. Among the main modifications are the redefinition of “yachts” and the revision of the exemptions applicable to these goods, replacing the term “current market price” with “normal market value.” Also, the obligation of governmental entities, such as the General Directorate of Civil Aeronautics and the Civil Registry Service, has been strengthened to provide relevant information on taxpayers.
These amendments, which include improvements in the rules for issuance of drafts and in the process of collecting from co-owners of the same property, will become effective on the first day of the month following their publication.
Transfer Pricing Rules
The arm’s length principle has been incorporated in line with the criteria established by the Organization for Economic Cooperation and Development (OECD). This means that corporate restructurings in which functions, assets, or risks are transferred from abroad to Chile will be evaluated. In addition, the 5% penalty on transfer pricing differences has been eliminated, clarifying that the adjustments will not impact other taxes unless otherwise provided.
The updates regarding advance pricing agreements (APA) allow for prior meetings and retroactively applying these agreements. The amendments will also become effective one month after their publication.
New Tax Avoidance Regulations
The rules related to tax avoidance have been significantly improved, maintaining the judicial declaration of avoidance while optimizing the procedures for notification and burden of proof distribution. A new administrative procedure has been established, and an executive committee will oversee it. These modifications will be effective as of the first day of the month following their publication.
Multijurisdiction in Audit Processes
Article 6 of the Tax Code has been changed to allow Regional Directors to carry out audits and reviews on taxpayers in any region of the country using electronic means. The effectiveness of these modifications will be deferred: they will begin on January 1, 2025, for some regions and in 2026 for the rest of the country.
Changes in Passive Income Matters
The regulations determining the control of entities through related parties have been adjusted, eliminating specific references and presuming spouses and relatives up to the second degree of consanguinity as related parties unless proven otherwise. These amendments will become effective on January 1, 2025.
VAT Modifications for Exporters
The Sales and Services Tax Law has undergone changes that require exporters to have a certain level of previous exports to justify VAT refunds. In the event of failure to comply with the established requirements, the reimbursed amounts must be refunded proportionally. These new grounds for prior special control will come into effect on the first day of the month following the law’s publication. The amendments to Article 36 will be applied six months after a new decree replaces the current one.
With these reforms, the government seeks greater clarity and efficiency in tax collection, adapting the legislation to international standards and improving tax compliance.
Read the law here