Assessment on Tax Presidential Proposals

by | Nov 18, 2021

Following, we share a comparative table, prepared by our Tax team, with the proposals in tax matters of the four candidates for President of the Republic with the best results in the polls.

Collection

Gabriel Boric

Over 8 points of GDP in 8 years.
José Antonio Kast
Maintains.
Yasna Provoste

5 points of GDP.

Sebastián Sichel
3 points of GDP in 5 years.

Tax System

Gabriel Boric

  • Disintegration of the tax system (maintaining an integrated regime for SMEs)
  • Modification of the IGC rates and tranches, increasing the tax burden for those with incomes over 4.5MM.
  • Limitation to the use of carryover tax losses.
José Antonio Kast
  • Decrease IDPC from 27% to 17%.
  • Negative personal tax of 17% for those who receive less than 680 thousand Chilean pesos per month.
  • Integrated system, 100% of the credit by IDPC and simplified.
  • Reinvestment of profits by the tax-free owners.
Yasna Provoste
Increased progressivity of the tax system.
Sebastián Sichel
Increased progressivity of the tax system.

Elimination or modification of exemptions

Gabriel Boric

  • Elimination of capital gains (as a general rule).
  • Elimination of the presumed income regime, moving to the SME regime.
  • DLF Reform 2: Increase of bases; exclusion of affordable housing with a higher tax value; limitation to 2 dwellings; modification of lease exemptions.
  • Elimination of benefits for properties acquired before 2004.
  • Elimination of first category exemption to FIPs.
  • Elimination of IH exemption regarding life insurance.
José Antonio Kast
  • Eliminate exemptions except those for the benefit of small businesses.
  • Eliminates ITE and replacement for VAT collection on financial services.
Yasna Provoste
  • FIP qualification as contributors of IDPC and elimination of withdrawals exemption.
  • Elimination of the Presumptive Income regime.
  • Periodic evaluation of franchises and tax expenses.
Sebastián Sichel
Review of exemptions for elimination or modification, taking as reference the reports issued by the Tax Commission for Growth and Equity, OECD and IMF.

Wealth Tax

Gabriel Boric

  • Tax on the net worth of people with the highest net worth.
  • Tax on retained earnings in companies.
  • Modify the IHD valuations to commercial value.
José Antonio Kast
Eliminate taxes on personal assets, such as contributions, donations and inheritances.
Yasna Provoste
  • Will analyze the patrimonial tax of the total net worth.
  • Increase in capital gains tax.
  • Increase burdens on high net worth.
  • Annual interest on accumulated FUT.
  • Review of the IHD.
  • Surveillance of capital abroad.
Sebastián Sichel

Review of property taxation, inheritance tax and luxury goods.

Mining Royalty

Gabriel Boric

Royalty with a progressive rate for mining exploitation that will be applied based on the value of the mineral extracted.
José Antonio Kast
Yasna Provoste
Review for a Royalty increase.
Sebastián Sichel
  • Replace the IEAM with a royalty on the mining operating margin between 5% -14%.
  • Minimum Tax on sales.
  • Modify the concessions law, increasing the patent value.

Specific / Special Taxes and Green Taxes

Gabriel Boric

  • Increase taxes on fuels to 7 UTM per m3 for gasoline and diesel, without exemptions, and on CO2 to 40 USD / co2.
  • Regulation and taxes on alcohols, tobacco, foods high in sugars and ultra-processed.
  • Ad valorem tax on plastic and polluting products.
José Antonio Kast
  • Extension of the application of green taxes to activities that generate polluting gases.
  • Study the feasibility of increasing the green tax for emissions of toxic pollutant gases from fixed sources and particulate matter.
  • Increased benefit to credit granted by donations to foundations.
Yasna Provoste
  • Increase in taxes on fixed and mobile source emissions.
  • Review of specific taxes on food and green taxes.
  • Review of the credit of the specific diesel tax for transport companies and industries.
  • Elimination of the green tax exemption for commercial vehicles.
  • Policy of tax incentives for private donations.
Sebastián Sichel
  • Tax to consumption of harmful substances / food. Modification of the tax on alcoholic beverages.
  • Move gradually towards a diesel tax of 6 UTM / m3.
  • Eliminate the credit for specific tax on diesel from freight transport companies.
  • Include the fuel tax (gasoline and diesel) in the VAT base.
  • Raise CO2 tax, from US $ 5 / ton to OECD levels, within 10 years.

Tax Avoidance

Gabriel Boric

  • Review of tax heavens regulations, CFC, sale of underlying assets in Chile.
  • Reform the NGA, empowering the IRS to apply it.
  • IRS access to information subject to bank secrecy.
  • Elimination of the administrative monopoly in the exercise of tax criminal action.
  • Establishment of crimes of criminal responsibility of legal persons in tax matters.
José Antonio Kast
Yasna Provoste
  • Modification of the NGA allowing administrative application with an ex-post control system.
  • IRS access to bank information.
  • Anonymous report figure.
  • Active inspection on mining companies avoiding risks of under declaration.
  • Review of the deductibility of expenses rules.
Sebastián Sichel
More resources to the IRS and the National Customs Service with a focus on increasing the use of technologies and reviewing attributions to request information.

SMEs and VAT

Gabriel Boric

  • Termination of the special VAT credit for construction companies.
  • VAT postponement.
José Antonio Kast
  • SMEs: Simplified accounting, instant depreciation, taxation based on withdrawals, 100% IDPC credit, reinvestment of profits.
  • IH elimination for micro and small businesses.
  • 0% rate for SMEs that sell > 25 thousand UF.
  • Elimination of some VAT exemptions and rate reduction from 19% to 17%.
Yasna Provoste
Reformulation of the tax incentive for R&D.
Sebastián Sichel
  • Establishment of a mechanism for reimbursing the credit for R&D expenses in the event of loss or return of excess.
  • Improvement of the current Pro SMEs regime.
  • VAT refund calculated on the basic food basket and average medical expenses.

Matter

Gabriel Boric

José Antonio Kast

Yasna Provoste

Sebastián Sichel

Collection
Over 8 points of GDP in 8 years.
Maintains.
5 points of GDP.
3 points of GDP in 5 years.
Tax System
  • Disintegration of the tax system (maintaining an integrated regime for SMEs)
  • Modification of the IGC rates and tranches, increasing the tax burden for those with incomes over 4.5MM.
  • Limitation to the use of carryover tax losses.
  • Decrease IDPC from 27% to 17%.
  • Negative personal tax of 17% for those who receive less than 680 thousand Chilean pesos per month.
  • Integrated system, 100% of the credit by IDPC and simplified.
  • Reinvestment of profits by the tax-free owners.
Increased progressivity of the tax system.
Increased progressivity of the tax system.
Elimination or modification of exemptions
  • Elimination of capital gains (as a general rule).
  • Elimination of the presumed income regime, moving to the SME regime.
  • DLF Reform 2: Increase of bases; exclusion of affordable housing with a higher tax value; limitation to 2 dwellings; modification of lease exemptions.
  • Elimination of benefits for properties acquired before 2004.
  • Elimination of first category exemption to FIPs.
  • Elimination of IH exemption regarding life insurance.
  • Eliminate exemptions except those for the benefit of small businesses.
  • Eliminates ITE and replacement for VAT collection on financial services.
  • FIP qualification as contributors of IDPC and elimination of withdrawals exemption.
  • Elimination of the Presumptive Income regime.
  • Periodic evaluation of franchises and tax expenses.
Review of exemptions for elimination or modification, taking as reference the reports issued by the Tax Commission for Growth and Equity, OECD and IMF.
Wealth tax
  • Tax on the net worth of people with the highest net worth.
  • Tax on retained earnings in companies.
  • Modify the IHD valuations to commercial value.
Eliminate taxes on personal assets, such as contributions, donations and inheritances.
  • Will analyze the patrimonial tax of the total net worth.
  • Increase in capital gains tax.
  • Increase burdens on high net worth.
  • Annual interest on accumulated FUT.
  • Review of the IHD.
  • Surveillance of capital abroad.

Review of property taxation, inheritance tax and luxury goods.

Mining Royalty
Royalty with a progressive rate for mining exploitation that will be applied based on the value of the mineral extracted.
Review for a Royalty increase.
  • Replace the IEAM with a royalty on the mining operating margin between 5% -14%.
  • Minimum Tax on sales.
  • Modify the concessions law, increasing the patent value.
Specific / Special Taxes and Green Taxes
  • Increase taxes on fuels to 7 UTM per m3 for gasoline and diesel, without exemptions, and on CO2 to 40 USD / co2.
  • Regulation and taxes on alcohols, tobacco, foods high in sugars and ultra-processed.
  • Ad valorem tax on plastic and polluting products.
  • Extension of the application of green taxes to activities that generate polluting gases.
  • Study the feasibility of increasing the green tax for emissions of toxic pollutant gases from fixed sources and particulate matter.
  • Increased benefit to credit granted by donations to foundations.
  • Increase in taxes on fixed and mobile source emissions.
  • Review of specific taxes on food and green taxes.
  • Review of the credit of the specific diesel tax for transport companies and industries.
  • Elimination of the green tax exemption for commercial vehicles.
  • Policy of tax incentives for private donations.
  • Tax to consumption of harmful substances / food. Modification of the tax on alcoholic beverages.
  • Move gradually towards a diesel tax of 6 UTM / m3.
  • Eliminate the credit for specific tax on diesel from freight transport companies.
  • Include the fuel tax (gasoline and diesel) in the VAT base.
  • Raise CO2 tax, from US $ 5 / ton to OECD levels, within 10 years.
Tax Avoidance
  • Review of tax heavens regulations, CFC, sale of underlying assets in Chile.
  • Reform the NGA, empowering the IRS to apply it.
  • IRS access to information subject to bank secrecy.
  • Elimination of the administrative monopoly in the exercise of tax criminal action.
  • Establishment of crimes of criminal responsibility of legal persons in tax matters.
  • Modification of the NGA allowing administrative application with an ex-post control system.
  • IRS access to bank information.
  • Anonymous report figure.
  • Active inspection on mining companies avoiding risks of under declaration.
  • Review of the deductibility of expenses rules.
More resources to the IRS and the National Customs Service with a focus on increasing the use of technologies and reviewing attributions to request information.
SMEs and VAT
  • Termination of the special VAT credit for construction companies.
  • VAT postponement.
  • SMEs: Simplified accounting, instant depreciation, taxation based on withdrawals, 100% IDPC credit, reinvestment of profits.
  • IH elimination for micro and small businesses.
  • 0% rate for SMEs that sell > 25 thousand UF.
  • Elimination of some VAT exemptions and rate reduction from 19% to 17%.
Reformulation of the tax incentive for R&D.
  • Establishment of a mechanism for reimbursing the credit for R&D expenses in the event of loss or return of excess.
  • Improvement of the current Pro SMEs regime.
    VAT refund calculated on the basic food basket and average medical expenses.

To see the proposals of the seven presidential candidates (spanish), you can review the following table

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