Aiming to inform our readers about the different tax regimes that will enter into force in Chile starting next year (2017), we are here making available the following chart with the information published by the Chilean Tax Authority (SII).
It is relevant to take into account that businesses that registered to commence activities as of July of the current year have the duty to choose one of the regimes at the very moment of their taxdeclaration. Conversely, businesses that commenced their activities in any time before such date, must choose to adopt one of these regimes before the end of the year.
As a tip for entrepreneurs, if you adopt this decision advised by your accountant, make sure he is aware of the implications of each tax regime before adopting one. If you are starting your business (and you do not qualify for the Presumed Income Regime) it is likely that the adequate regime for you is the simplest, this is14ter.
Also consider that certain types of companies do not have the possibility of choosing.
Tax Regimes 2016 – 2017:
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MIPYMES
|
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| Presumed Income Tax (Art. 34) | Simplified Taxation (Art. 14 Ter Letter A) | Attributed Income System (Art. 14 A) |
Semi Integrated System (Art. 14 B) |
| Tax regime where tax is paid on the basis of a presumed income | Simplified regime that frees the taxpayer from certain tax obligations | Tax regime subject to full accounting, with assignment to partners of the full tax credit of the First Category Tax | Tax regime subject to full accounting, with assignment to partners of the partial tax credit of the First Category |
Segments preferably elegible
| Micro and small companies/Micro enterprise (Agricultural, Transport and Mining) |
Micro, Small and Medium Companies |
Any segment |
Any segment |
Maximum Yearly Income Required to Remain in the Regime
| Sum in UF:
Agriculture = a 9.000 Transport = a 5.000 Mining = 17.000 |
Average of the last 3 years of business = to 50.000 UF |
No income limit |
No income limit |
Term of Validity
|
Current |
Current |
From January 1st, 2017 onwards |
From January 1st, 2017 onwards |
Term of Permanence in the Regime
|
At least 5 years |
At least 3 years (*). If registered to commence activities in this regime there is the possibility to withdraw from it by the end of 1 calendar year. |
At least 5 years |
At least 5 years |
Date by Which the Taxpayers Ought to give Notices to the Chilean Tax Authority (SII) in Order to be Incorporated Into the Regime
|
Between January 1st and April the 30th of the year in which it is incorporated to the regime. When taxpayers register to commence activities. |
Between January 1st and April the 30th of the year in which it is incorporated to the regime. When taxpayers register to commence activities. |
Between June 1st and December 31st of 2016. When taxpayers register to commence activities |
Between June 1st and December 31st of 2016. When taxpayers register to commence activities. |
New Ventures: Due Dates to Give Notices to the Chilean Tax Authority
|
At the same time of the registring to commence activities. |
At the same time of the registring to commence activities. (*) |
At the same time of the registring to commence activities. |
At the same time of the registring to commence activities. |
Type of Legal Entity
| * Individual Companies * Individual limited liability companies * Communities * Cooperatives * Partnerships*Simplified Corporations (formed by individuals). |
Year 2016: any type of taxpayer (legal person or entity). Year 2017: * Individual Companies * Individual limited liability companies * Communities * Partnerships *Simplified Corporations (SpA, formed by individuals). |
* Individual Companies |
* Corporations * Closed Corporations*Simplified Corporations (SpA) * Agencies (Art 58 N° 1) (formed by legal persons) * Limited joint-stock partnership. |
Composed of
| * Individuals:
– Co-proprietors -Cooperative -Partners -Shareholders |
* Individuals with domicile or residency in Chile.
* Taxpayers without domicile nor residency in Chile. * Entities which adopted the Attributed Rent Income (14 letter A) |
* Individuals:
-Co-proprietors -Partners -Shareholders With domicile or residency within the country. * Taxpayers without domicile nor residency in Chile. |
Individuals and/or entities with domicile or residency in the country and/or taxpayers without domicile nor residency in Chile |
Type of Accounting and Required Records
| * Sales and purchases journal , if VAT applies
* Otherwise, they must apply an income control system that complies with the requirements established by the Service. |
* Cash journal, compulsory for all taxpayers * Sales and purchases journal, if VAT applies * Income and expense journal, if VAT does not apply |
Complete compulsory accounting. All corresponding records, among them: Cash Journals, LogBook, Major Ledger , Inventories and Balances. Plus the subsidiary ledgers such as: Daily Sales Ledger, Salary Ledger, Tax Ledger, Withholding Tax Ledger. |
Complete compulsory accounting. All corresponding records, among them: Cash Journals, LogBook, Major Ledger , Inventories and Balances. Plus the subsidiary ledgers such as: Daily Sales Ledger, Salary Ledger, Tax Ledger, Withholding Tax Ledger. Mayor |
Company’s Taxation
|
First Category Tax over the Tax Base that depends on the turnover from the activity of the taxpayer: |
First Category Tax over the Tax Base which is determined starting from the difference between the incomes received and expenses paid in the period. Starting from 2017 can be exempt from paying the First Category Tax |
First Category Tax over the company’s Net Taxable Income | First Category Tax over the company’s Net Taxable Income |
Tax Benefits Referred to First Category Income Tax
|
Pays taxes according to the percentages, depending of the activity |
Able to be exempt of the first category income tax from January 1st 2017 onwards. |
Able to deduct up to 50% of the Net Taxable Income levied with the first category income tax that is kept reinvested within the company. | Able to deduct up to 50% of the Net Taxable Income levied with the first category income tax that is kept reinvested within the company. |
Conditions to Make Use of the Benefit
|
Entities shall be created by the end of the respective business year, exclusively by proprietors, co-proprietors, partners or shareholders subject to complementary additional tax |
Annual average of the income = 100.000 UF of the last 3 business years applying to the benefit. DEDUCTION LIMIT: 4.000 UF |
Annual average of the income = 100.000 UF of the last 3 business years applying to the benefit. DEDUCTION LIMIT: 4.000 UF |
|
Tax of the Partners Subject to Global Complementary or Additional Taxes
|
With right to credit for the First Category Tax paid by the company |
With right to credit for the First Category Tax paid by the company |
With right to credit for the First Category Tax paid by the company |
With right to a partial credit for the First Category Tax paid by the company |
Withdrawals of Profits
|
Fully withdrawn by partners, according to shareholder participation. |
Fully withdrawn by partners, according to shareholder participation. |
Fully withdrawn by partners | Allocated in proportion to their withdrawal, remitted or distributed to partners in chronological order |
Credit for the First Category Tax
|
100% of the credit |
100% of the credit |
100% of the credit |
65% of the credit |
Source: Servicio de Impuestos Internos
Santiago Henríquez C. Lawyer.
Foto: Phil Houston (CC0)