Chile’s tax authority (Servicio de Impuestos Internos – SII) published Circular No. 34 of 30 July 2024 in the Official Gazette on 1 July 2024. It offers guidance on the optional substitute tax for final taxes (impuesto sustitutivo de los impuestos finales – ISIF) as established by Law No. 21,681.

Law No. 21,681 creates the Transitory Emergency Fund for Fires and establishes other measures for reconstruction. In addition, Articles 10 and 11 of this Law establish an optional substitute tax regime for final taxes (complementary global tax and additional tax), referred to as the ISIF regime.

This circular aims to provide instructions regarding the ISIF above, which may be optionally applied by first-category taxpayers (IDPC) who declare their taxes based on effective income determined under the regime in the Income Tax Law (LIR).

The ISIF (Specific Income Tax) is applied to the balance of accumulated taxable profits contained in the record of income subject to taxes (RAI) as of 1 January, 2017, which may include accumulated taxable profits generated up to 31 December, 2016.

Eligible taxpayers for the ISIF regime comprise those under the general corporate tax regime and the SME regime, provided they maintain a balance of accumulated taxable profits subject to taxation under taxable income (RAI) as of 31 December, 2023.

Taxpayers who fulfill the requirements set forth by the Law can take advantage of the ISIF regime until the last banking business day of January 2025.

The applicable ISIF rates are as follows:

• 12% without corporate tax credits for taxpayers under the ISIF regime;
• 30% with corporate tax credits for taxpayers under the SME regime.

With certain adjustments, taxpayers can apply this regime to part or all of their accumulated taxable profits in the RAI.