Snapshot of the proposed modification of the exemption that benefits stock market operations

by and | Oct 26, 2021

On September 20th 2021, the Executive presented a bill that seeks to increase the amount of pensions in Chile. One of the proposed financing mechanisms consists of taxing capital gains derived from the sale of shares and other financial instruments with a stock market presence, which are currently exempt from all taxation. 

Specifically, the Executive proposes to tax these capital gains with a single tax of 5%, whose taxable base would be the difference between the sale price of the instrument and: (i) its official closing price as of December 31st of the acquisition year or (ii) its adjusted acquisition cost, in accordance with the general rules. In the case of securities acquired prior to the entry into force of the law, it could be pick the official closing price of the respective security as of December 31st, 2021. Gains obtained by institutional investors would not be under this tax. 

On September 28th and 29th, the project presented by the Executive was discussed by the Labor and Social Security Commission. Without prejudice to being a matter of exclusive initiative of the President, the Commission made an indication to increase the tax burden applicable to these earnings, taxing them according to the general rules. That is, affect them with a complementary global tax in the case of natural persons residing in Chile, whose rate can reach 40% in the highest sections, or with the 35% rate that affects people without residence in Chile. On the other hand, the Commission maintained the exemption for institutional investors. Notwithstanding the defects of constitutionality that may affect it, the indication made by the Commission will undoubtedly impact the discussion and result of the initiative presented by the Executive. 

Currently the project is in the Finance Commission and should be discussed today, but the session was postponed.

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