A tax reform entitled “Law No. 20.780” related to foreign investor has published on 29 September 2014 which is effective from 1st October 2014. This creates different regimes subject to Corporate Income Tax (CIT) from 1st January 2017. The CIT rate will raise 21% for the year 2014, 22.5% for 2015, 24% for 2016, 25% in attributed regime case and 25.5 % in distributed regime for 2017 and lastly 27% in distributed regime case for the year 2018. Under the thin-capitalization rule, it establishes a debt-to-equity ratio of 3:1. This law revises the tax treatment of capital gains effective from 2017, the CFC rules for claiming foreign tax credits paid effective on 2016. It also gives new anti-avoidance authority to the tax administration in Chile that effective from 15 September 2015.
The Tax Reform Bill which was published in the Official Gazette on September 29, 2014 as Law 20.780 has modified Article 21 of the Chilean ITL, which has increased penalty from 35% to 40% from 2015. This rate is applicable in cases, where the tax authority has determined a transfer pricing adjustment in accordance with the law. (Art 21 (amended) of ITL).
