Among the measures, the creation of the Executive Committee of the SII was approved, which will have a key role in the application of the application and determination of tax avoidance.
On August 27, the Ministry of Finance presented new amendments to the Tax Compliance Bill, currently under discussion in the Senate.
Several of these indications have already been approved by the Senate Committee, highlighting the following key issues:
- General Anti-Avoidance Rule (GAS)
- Judicial Seat: The control of the NGA in judicial seat is maintained. The existence of abuse or simulation must be declared by the Tax and Customs Court (TTA), at the request of the director of the Internal Revenue Service (SII), upon recommendation of the Executive Committee.
- Definition of avoidance: It was specified that there is avoidance when, by means of acts or “legal business” or a set of them, taxable events established by tax law are avoided.
- Statute of limitations: It was established that the statute of limitations for inspection and review of those acts considered to be elusive will be 6 years.
- Conditions to declare avoidance: In order to declare avoidance, the legal acts or businesses must have reduced the taxable base by an amount equal to or greater than 1,000 UTM; accessed a tax benefit; or entered a special tax regime.
- Governance of the SII:
- The creation of the Executive Committee of the SII was approved, chaired by the director of the SII and composed of the deputy directors of the Taxation Regulations and Legal Departments. This committee will have key functions such as the application of the NGA and the determination of the existence of circumvention.
- The Tax Committee was also created, responsible for issuing opinions on SII circulars that require mandatory public consultation and on the Service’s auditing strategies.
- Elimination of the amendments to Article 27 bis of the Sales and Services Tax Law.
- The intended incorporation of Article 27 bis, which dealt with VAT restitution and refund amounts, was eliminated.
With respect to the new indications introduced on August 27, still under discussion, the following stand out:
- Extension of powers of the Taxpayers’ Ombudsman’s Office (DEDECON): It will not only be able to advise taxpayers before the SII, but also before Customs and the General Treasury of the Republic.
It is also established that it must give an annual account of its management to the Senate Finance Committee.
- Amendments to Art. 64 of the Tax Code: The SII is expressly prohibited from applying its power of assessment in business reorganizations, such as the conversion of the sole proprietorship (or sole proprietorship), and in the case of contribution of assets made by individuals, to the extent that such reorganizations obey a legitimate business reason.
It is specified that the power of appraisal will also not apply in the case of “international” divisions and mergers. Also, the requirement of being part of the same corporate group would be eliminated.
- Relationship rules: The consideration of siblings is reincorporated into the relationship rules.
For more details about these new guidelines, please contact our Tax Group:
Rodrigo Albagli | Partner | ralbagli@az.cl
Álvaro Rosenblut | Partner | arosenblut@az.cl
Andrea Bobadilla | Tax Group Director | abobadilla@az.cl
Valentina Herrera | Associate | vherrera@az.cl
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