Chile’s tax authority has ruled that a proposed restructuring of a Panamanian foundation and its underlying companies would not trigger offshore indirect transfer taxation or a taxable wealth increase for beneficiaries. The ruling also clarifies that the existing tax basis remains at the company level where the underlying entities continue to hold the disclosed investment assets.
Chile’s tax administration, the Servicio de Impuestos Internos (SII), has clarified the Chilean tax consequences of a proposed restructuring involving a Panamanian foundation and its underlying foreign investments.
In Ruling No. 2191 of 2026, the SII examined whether the reorganisation would trigger offshore indirect transfer (OIT) taxation, create a taxable increase in wealth for the foundation’s beneficiaries, or alter the tax basis of assets previously disclosed under Chile’s 2015 extraordinary asset-disclosure regime.
The ruling provides important guidance on the interaction between Chile’s OIT, controlled foreign company (CFC), and asset-disclosure rules, while highlighting the circumstances in which tax basis can—and cannot—be transferred from foreign intermediary entities to their individual beneficiaries.
Reorganisation of foreign-held companies avoids OIT taxation
The foundation owns two Panamanian companies that hold foreign investment accounts initially disclosed under Chile’s extraordinary asset-disclosure regime established by article 24 (Transitory) of Law No. 20,780. Under the proposed restructuring, the two companies would merge into a single entity, then divide into three separate companies with equal asset distribution. Each company would hold one-third of the underlying investment accounts.
The SII concluded that neither the merger nor the subsequent division triggers Chile’s offshore indirect transfer (OIT) rules contained in article 10 of the Income Tax Law. Because both companies are incorporated outside Chile and hold no domestic assets, no taxable event occurs under this framework.
The authority flagged that beneficiaries may face separate scrutiny under the controlled foreign company (CFC) rules in article 41G of the Income Tax Law, requiring independent review.
Foundation revocation produces no taxable wealth increase
When the foundation is revoked and its shares distributed to beneficiaries in proportion to their existing interests, no taxable increase occurs. The SII tied this conclusion to paragraph 14 of article 24 (Transitory) of Law No. 20,780, which permits taxpayers to request that declared assets be treated as directly held in their personal estates provided they dissolve the intermediary entities. Under subparagraph (e) of the same provision, the declared value on which the one-time substitute tax was paid becomes the cost basis of those assets.
The key condition: each beneficiary receives shares representing the same proportional interest held before revocation, meaning one-quarter of the foundation’s assets for each of the three children and mother combined across the three new companies.
Tax basis remains at company level
A critical distinction governs where tax basis attaches. The SII emphasised that the cost basis from the 2015 amnesty disclosure only transfers to beneficiaries’ personal patrimonies if the intermediate companies holding the assets are dissolved.
Since companies X, Y, and Z remain operational after foundation revocation, the underlying investment accounts continue to be held through these entities.
Consequently, the tax cost remains the value recorded in the companies’ accounting records, not the amnesty-declared value. This approach prevents an artificial stepped-up basis while preserving the original disclosed value as reference documentation.
