Actual Bills on Tax Matters in Legislative Process

by and | Jul 27, 2021

Below we present a brief review and status of the processing of the 17 bills on tax matters that have had progress in Congress as of 2015. Also, in the following table you will find the link to access each one of them, its date of entry and origin.

Specific Tax on Fuels
Bulletin: N°14.289-05
Date: 24-05-21
Stage: First Constitutional Procedure - First Report of the Finance Commission
Origin: Chamber of Deputies

It seeks to mitigate the social and economic effects of the COVID-19 pandemic by reducing the Specific Fuel Tax (IEC).
It is proposed that the IEC be lowered by 50% in the event of a constitutional state of exception or any public calamity that seriously affects or compromises the employment and income of citizens, maintaining said reduction until the event that motivated it ceases, as well as its consequences.
On July 6th, the Finance Commission approved the project in general.

Specific Tax on Fuels
Bulletin: N°14.279-07
Date: 28-05-21
Stage: First Constitutional Procedure - Second Report of the Finance Commission
Origin: Senate

Measures are adopted to combat tax avoidance and evasion, to increase collection, without negatively affecting the levels of economic activity.
It is proposed the obligation of banks and financial institutions to provide information to the Chilean IRS regarding the balances of financial accounts and amounts of payments that you maintain with respect to holders residing in the country, to the extent that they register a daily, weekly or monthly movement, equal or more than 1,500 UF.
On June 23rd, the Senate approved the bill in general, returning to the Finance Committee for discussion in particular.

Obligation to inform to the Chilean IRS

Bulletin: N°14.111-05
Date: 23-03-21
Stage: First Constitutional Procedure - Second Report of the Finance Commission
Origin: Senate

Measures are adopted to combat tax avoidance and evasion, to increase collection, without negatively affecting the levels of economic activity.
It is proposed the obligation of banks and financial institutions to provide information to the Chilean IRS regarding the balances of financial accounts and amounts of payments that you maintain with respect to holders residing in the country, to the extent that they register a daily, weekly or monthly movement, equal or more than 1,500 UF.
On June 23rd, the Senate approved the bill in general, returning to the Finance Committee for discussion in particular.

Wealth tax

Bulletin: N°13.555-07
Date: 01-06-20
Stage: Second Constitutional Procedure - First Report of the Constitution Commission
Origin: Chamber of Deputies

Constitutional reform project that seeks to establish a temporary tax on assets, to finance monetary transfers to support households on the occasion of the health emergency. The original project has undergone various modifications in the context of the parliamentary discussion, its main axes being the following:
(1) Wealth Tax at a rate of 2.5% on that part of the net worth that exceeds the sum of US $ 22 million.
(2) Temporary increase, for the years 2021 and 2022, of the First Category Tax rate to 30%, with respect to “Mega Companies” (those whose average gross income is greater than 1,000,000 UF).
(3) Temporary suspension, for the years 2021 and 2022, of the exemption to capital gains of instruments with a stock market presence and the exemption of First Category Tax that benefits withdrawals from Private Investment Funds.
(4) Temporary reduction of the VAT rate to 10% regarding fuels, food, sanitary supplies, among others; and 4% with respect to basic products such as bread, flour, eggs, milk, cheeses, fruits, vegetables, vegetables, legumes, tubers, and cereals; books; medicines for human use, among others.
After its particular discussion in the Chamber of Deputies, only the temporary VAT reduction for services and basic supplies was approved, with the exception of fuels (excluded by separate vote). The project went to the Senate Constitution committee for discussion, where it is expected that parliamentarians will enter indications to reincorporate the added indications not approved by the Chamber.

Destination of Taxes to Regional Budget
Bulletin: N°12.940-07
Date: 10-09-19
Stage: First Constitutional Procedure - First Report of the Constitution Commission
Origin: Chamber of Deputies

In order to strengthen decentralization and recognition of regions and communes, it is proposed that companies have a legal obligation to pay taxes in the territories where they are located.
Specifically, this project establishes that the regional budget will be composed - in addition to that assigned by the Budget Law - by the tribute of the companies that carry out their extractive or productive processes within the territory of the same region, which may not be less than 10% of the total amount of tax to be paid.

Public Ministry Prosecution of tax crimes
Bulletin: N°10.843-07
Date: 04-08-16
Stage: First Constitutional Procedure - First Report of the Constitution Commission
Origin: Chamber of Deputies

The empowerment of the Public Ministry to investigate tax crimes is introduced, which is subject to the authorization of the responsible Judge.
This alternative is only reserved for those cases in which the criminal process has already been initiated for a common crime in which the Public Ministry has communicated to the IRS that there are antecedents that could configure tax crimes, as well as for the case in which it is the IRS itself the one who requests background information from the Prosecutor's Office.
It also establishes the obligation of the IRS Director to substantiate the decision not to proceed with criminal charges, giving an account of the criteria that were taken into account.

Public Ministry Prosecution of tax crimes
Bulletin: N°9.954-05
Date: 19-03-15
Stage: First Constitutional Procedure - Second Report of the Finance Commission
Origin: Chamber of Deputies

With an analogous objective to the previous projects, originally it was intended to give the Public Ministry the power to investigate and exercise public action for tax crimes of which it becomes aware of the investigations that it will carry out.
In the processing of the project, this power was limited only to cases in which: (1) The amount of the tax exceeds 30 UF per year and seriously affects the fiscal patrimony, and (2) The relationship of the facts with crimes of embezzlement of public funds, fraud, bribery, among others.
In addition, the obligation of the IRS Director to base the decision regarding the deduction of the criminal charges was included, expressly indicating the criteria on which it should be based.

Public Ministry Prosecution of tax crimes
Bulletin: N°9.954-05
Date: 19-03-15
Stage: First Constitutional Procedure - Second Report of the Finance Commission
Origin: Chamber of Deputies

With an analogous objective to the previous projects, originally it was intended to give the Public Ministry the power to investigate and exercise public action for tax crimes of which it becomes aware of the investigations that it will carry out.
In the processing of the project, this power was limited only to cases in which: (1) The amount of the tax exceeds 30 UF per year and seriously affects the fiscal patrimony, and (2) The relationship of the facts with crimes of embezzlement of public funds, fraud, bribery, among others.
In addition, the obligation of the IRS Director to base the decision regarding the deduction of the criminal charges was included, expressly indicating the criteria on which it should be based.

Mining Royalty
Bulletin: N°12.093-08
Date: 12-09-18
Stage: Second Constitutional Procedure - First Report of the Mining Commission
Origin: Chamber of Deputies

It seeks to establish an obligation for mining operators to pay compensation to the State.
At the beginning, the project only sought to impose this obligation on those who exploited copper or lithium, but throughout the legislative process it was extended to all concessional substances.
The obligation to pay 3% of the ad valorem value of the extracted minerals is established. In the event that the annual average copper price exceeds two dollars per pound, an additional compensation is established, with a variable and progressive rate for that additional part of the price.
Regarding this additional compensation, it is possible to reduce the marginal rates in each price bracket, for those mining operators who prove a level of processing of the extracted minerals, accredited by the Chilean Copper Commission.
Finally, it is pointed out that this compensation will not be required from those mining operators whose annual sales do not exceed the value equivalent to 12,000 metric tons of fine copper.
It has been alleged that the project would be unconstitutional. In addition, the current wording presents inconsistencies stemming from the lack of adequacy of the entire regulation to the extension of its object to all the substances that can be granted.
However, on May 6th, the Chamber of Deputies approved the bill in particular, which will be reviewed by the Senate.

Criminal Liability of Legal Persons for Tax Crimes
Bulletin: N°11.832-07
Date: 19-06-18
Stage: First Constitutional Procedure - First Report of the Constitution Commission
Origin: Senate

It is proposed to expand the catalog of crimes for which a legal entity may be sanctioned, including the following of a tax nature: (1) Fraud procedures aimed at hiding or defacing the true amount of the operations carried out or to evade tax; (2) Malicious omission of declarations required by tax laws for the determination or settlement of a tax; and (3) Willful receipt of compensation from institutions to which donations are made.
Likewise, the project incorporates into the catalog of crimes applicable to legal persons both the lack of declaration, as well as the presentation of maliciously incomplete or false declarations, in audits carried out by the Chilean IRS in the context of the execution of derivative instruments.
Finally, the following penalties are added in the case of being convicted of these crimes: (1) the temporary or perpetual prohibition of entering contracts with any organ of the State administration and with legal persons of public law; and (2) the temporary or perpetual prohibition of acquiring or enjoying concessions of any kind.

Prohibitions for those who are related to companies domiciled offshore.
Bulletin: N°11.538-03
Date: 12-12-17
Stage: First Constitutional Procedure - First Report of the Economic Commission
Origin: Chamber of Deputies

It is proposed that national or foreign legal entities that have interests in legal entities domiciled in countries or jurisdictions considered tax havens may not: (1) Enter into contracts with the State; (2) Receive subsidies of any kind granted by the State; (3) Hold concessions on national assets, licenses or permits that enable the use, exploitation or exploration of these; (4) Be holders of authorizations to establish and operate banks or financial institutions; and (5) Be holders of authorizations to establish and operate pension fund administrators.
In addition, these prohibitions are extended to those who maintain or enter contracts with said entities.
Those who, at the entry into force of this law, have an interest or contractual relationships in or with legal persons domiciled in tax havens, must face sanctions such as the expiration of the contract, subsidy, concession, license or permit, or the revocation of the authorization.

Autonomy of the Chilean Internal Revenue Service (IRS)

Boletín: N°11.217-07
Fecha de Ingreso: 08-05-17
Etapa: First Constitutional Procedure - First Report of the Constitution Commission
Origen: Cámara de Diputados

Se busca consagrar constitucionalmente al SII como un organismo autónomo, con patrimonio propio, de carácter técnico, al que le corresponde la aplicación y fiscalización de todos los impuestos actualmente establecidos o que se establecieren, fiscales o de otro carácter en que tenga interés el Fisco y cuyo control no esté especialmente encomendado por la ley a una autoridad diferente, rigiéndose por los principios de independencia, imparcialidad, objetividad, juridicidad, eficiencia, efectividad, equidad, probidad y transparencia.

Procedure for Executive Collection of Tax Obligations
Bulletin: N°11.157-07
Date: 15-03-17
Stage: First Constitutional Procedure - First Report of the Constitution Commission
Origin: Chamber of Deputies

Currently, in the executive procedure for the collection of tax obligations, the Treasury has the role of creditor and substantiating judge.
It is proposed to establish the appeal, with the sole effect of repayment, regarding the resolution that declares the opposition of the executed inadmissible, in the aforementioned collection procedure, granting the courts of justice the power to know and resolve on said decision of the Service of Treasuries.

VAT Tax Credit
Bulletin: N°10.908-05
Date: 13-09-16
Stage: First Constitutional Procedure - First Report of the Finance Commission
Origin: Chamber of Deputies

It seeks to discourage excessive delay in payments to suppliers, exercised by companies with greater bargaining power.
It is proposed to condition the use of the tax credit to the full and effective payment of the invoice that originates it, giving the right to this only when the taxpayer has paid the entire amount of the respective operation, regardless of the term or payment condition agreed with the seller or service provider.
In addition, it is established that the taxes charged or withheld on invoices that have not been canceled after ninety days have elapsed since the respective operation will not be entitled to credit, in such a way that it tends to speed up payment to suppliers.

Appointment of the Chilean IRS Director
Bulletin: N°10.710-05
Date: 18-05-16
Stage: First Constitutional Procedure - First Report of the Finance Commission
Origin: Chamber of Deputies

It seeks to give greater guarantees to citizens regarding the professionalism and excellence of the Director of the Internal Revenue Service.
The initiative establishes a procedure for the appointment of the head of the IRS, in which the highest authorities of the Republic participate, such as the President and the Senate, where the election made by the former must be approved by the latter.

Exception to Reservation of Tax Information
Bulletin: N°9.702-05
Date: 05-11-14
Stage: First Constitutional Procedure - First Report of the Finance Commission
Origin: Chamber of Deputies

It seeks to favor the spouse who, in connection with a divorce or marriage annulment trial, is demanding financial compensation, providing them with fundamental evidence to prove their claim.
Specifically, as an exception to the reservation of tax information enshrined in article 35 of the Tax Code, the examination of the taxpayer's declarations made by the judge is established when necessary for the prosecution of divorce or marriage nullity proceedings in that economic compensation is demanded.

Exception to reservation of Tax Information
Bulletin: N°6.638-05
Date: 04-08-09
Stage: Second Constitutional Procedure - First Report of the Constitution Commission
Origin: Chamber of Deputies

It seeks to modify the same article mentioned in the previous point, but extending the exception to all lawsuits, of any matter, whose knowledge corresponds to the Family Courts.

Although the following projects are pending, due to the downtime of the legislative process, were not considered:

(1) Constitutional Reform that allows a parliamentary initiative to reduce taxes in certain cases (Bulletin No. 4,254 07);

(2) Constitutional Reform that establishes tax exemption in favor of the elderly (Bulletin No. 6,656-07);

(3) Project that establishes the payment of a specific municipal benefit tax for the installation of an electric power generating plant (Bulletin No. 6,823-08);

(4) Project that aims to modify the D.L. No. 3,059 of 1979 and the Income Tax Law, allowing cabotage to be carried out by Chilean and foreign merchant vessels (Bulletin No. 8,330-15);

(5) Amendment to Title V of the Tax Code, referring to the executive collection of money tax obligations (Bulletin No. 8.605-05), and

(6) Bill that creates a unified regime for tax benefits for donations made to non-profit entities (Bulletin No. 9.266-05).

About the Bill that submits for the consideration of the Congress the Agreement between Chile and the United States to avoid double taxation and to prevent tax evasion, together with its respective Protocol (Bulletin No. 9258-10), was approved and dispatched to the Executive Branch. However, its promulgation is in standby as it is still pending the approval of the Agreement in the North American Senate.

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