Chilean President Gabriel Boric proposed a new VAT regime for individuals selling at fairs to the Chamber of Deputies on 8 August 2024. The proposal was made through the bill Mensaje Presidencial 168-372.

Fairs in Chile sell non-perishable food items and are held in public spaces from Tuesday to Sunday. The Bill suggests adding a new paragraph (Párrafo 7 ter) to the VAT Law (DL 875 of 1974), introducing six new articles (35J to 35Ñ).

The main provisions of the six new articles are:

• Taxpayers are vendors at fairs;
• The tax base is the gross sales price, and no deductions are allowed. The tax base will apply when payments are made electronically. The Tax Administration (Servicio de Impuestos Internos, SII) will provide a public list of approved operators for these transactions;
• The tax base for this substitute tax will correspond to the sales transactions carried out by the fairs through electronic payment methods that ensure the traceability of operations. The Internal Revenue Service will authorise the operators who can offer this service, maintaining a public list of them. The substitute tax rate will be 1.5%, and the sum of this rate plus the service commission of the payment operator may not exceed 3.5% of the sales of these taxpayers;
• To qualify for this special regime, sellers must register with the Municipality and obtain a permit to sell at fairs. They must also register this activity on the SII portal. Registration for this substitute regime must be done at the time of starting activities or within January of the year in which the taxpayer wishes to enter the regime.
• The operators, administrators, or providers of electronic payment methods shall act as withholding agents regarding the substitute tax regulated in this section. The withholding agent must declare and pay the substitute tax every month within the same deadline established in Article 64.
• Municipalities must periodically provide the Tax Authority with information regarding the permits or licences granted to individuals to carry out their activities in open-air markets, including their revocation, expiration, or termination. The Tax Authority will establish the format and frequency of such information through a resolution.
• Merchants from street fairs whose permits or licences have been revoked, expired, or terminated for any reason will be excluded from the substitute regime. Furthermore, those who inform the Internal Revenue Service of other commercial activities and those who use electronic payment methods from operators other than those authorised by the Service will also be excluded.

The bill will undergo a legislative process, with a vote by the Chamber of Deputies. The Senate will then review and vote on the approved Bill. Upon approval, the President is required to promulgate and publish the bill.

Once enacted, sellers will have until 31 July 2025 to comply with the requirements.