Chile’s tax authority (SII) issued Ruling No. 146-2026 clarifying that shareholder-employees cannot deduct severance pay or unemployment insurance contributions, while transportation and meal allowances are taxable but may be deductible if reasonable and necessary for the business.
Chile’s tax authority (SII) recently published Ruling No. 146-2026 of 21 January 2026, clarifying the tax treatment of various expenses incurred in relation to shareholder-employees who receive remuneration from their companies.
The Ruling focuses on the tax deductibility of specific labour-related benefits paid to business partners who perform work for their own companies.
SII clarifies that severance pay and unemployment insurance contributions cannot be deducted as business expenses because partners do not legally qualify as dependent employees. While these specific benefits are disallowed, payments for transportation and meal allowances are treated as part of the partner’s taxable salary. Consequently, these allowances may be deducted by the company, provided they remain within reasonable financial limits and are subject to the appropriate second-category income taxes.
Severance pay
Severance pay is not applicable to partners. This is because such payments arise from the termination of a labour contract and are a legal right reserved for “workers,” a condition the partner does not meet. Consequently, these payments are not considered remuneration and cannot be deducted by the company as a necessary expense to produce income.
Transportation and meal allowances
Unlike regular employees, partners cannot treat these allowances as non-taxable income. Instead, these amounts are taxable under the Single Second Category Tax. They are considered part of the “business salary” and are deductible only if they meet the general requirements of reasonableness and business necessity.
Unemployment Insurance
Law No. 19.278 establishes this insurance specifically for dependent workers governed by the Labour Code. Since a partner lacks this status, they are not eligible for the insurance. Any payments the company makes for a partner’s unemployment insurance are not deductible as business expenses.
