Chile: Chilean Tax Reform

This change in taxation for companies has generated a significant slowdown in economic growth (current 5% down to 2% in the future). The gradual change in company income tax (20% in 2013) will be as follows:

  • 2014 up to 21%, 2015 up to 22,5% and up to 24% in 2016.
  • “Assigned income” up to 25% in 2017.
  • “Partial basis” up to 25,5% in 2017 and up to 27% in 2018.

The tax paid by the company is a credit to individual taxes called “global complementary tax” where the maximum rate will be 35% (currently 40%). In the case of income tax based on “assigned income”, the credit will be 25%; and in the case of “partial basis”, the company will be taxed at 27% and when the distribution takes place, they could only have a credit of 65% of the 27%. From June to December 2016 companies must inform the tax authority which alternative will be chosen. Foreign investors will be taxed at a 35% tax rate with a credit based on the prior mentioned. Goodwill will be considered as a non-amortisable intangible asset, and will only be deductible in the case of the termination of business or closure of the company.

Small and medium sized companies (income under USD 1 million) can depreciate its fixed assets in one year. The companies that exceed the specified level of sales can apply 10% of the useful life assigned by the authority. Statement of Investment abroad not declared, will pay 8% to regularise such investment until 2015 (tax heavens not included). There will be a new tax system for small businesses called “14 TER” (sales below USD 2 million) and they will not be obligated to keep accounting books and their taxable income will be only income and expenses (as an actual net cash flow).


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