Thursday, September 5, 2019
Chile's Chamber of Deputies approved at the end of August legislation to comprehensively reform the tax system, as set out in Bulletin 12043.
The legislation, which now passes to the Senate, includes provisions to speed up VAT recovery on the purchase of fixed assets, improve VAT recovery terms for construction businesses, and introduce 19 percent VAT on digital services rendered to Chilean consumers by foreign businesses.
The introduction of tax on business-to-consumer supplies of services by non-resident businesses was recommended by the OECD in its conclusions on the taxation of the digital economy, in Action 1 of its Base Erosion and Profit Shifting project and subsequent VAT/GST Guidelines.
Further, the bill will introduce a new simplified tax regime for micro, small, and medium sized enterprises, including simplified accounting and eased tax filing requirements.
Finally, the bill would introduce new environmental taxes and reform the country's corporate tax framework, including by modifying the general anti-avoidance rule (GAAR) and implementing the OECD's base erosion and profit shifting recommendations in the area of preventing permanent establishment avoidance.