/ Tax relief granted by Chilean Government to mitigate the economic effects of COVID-19 pandemic7 April, 2020
The following is a summary of the most recent tax related relief measures adopted by the Chilean government to mitigate the severe effects that the COVID-19 pandemic on the domestic economy
A new law (N° 21.225) was published in the official gazette of Thursday 2 April 2020 which reduces the Stamp Tax on loans and bonds to a rate of 0% for the period 1 April to 30 September 2020.
This law also provides for certain subsidies to poor families, a capitalisation of Banco Estado (the state owned commercial bank) and raises the ceiling for the government to borrow.
A presidential decree (N°420) was published in the official gazette of Wednesday 1st April ordering the following measures.
Payment of Value Added Tax (VAT) was postponed for small and medium sized enterprises (i.e. entities whose annual sales do not exceed UF 75,000- approx. US$ 2.6 million) (“SMEs”) and for entities whose annual sales do not exceed UF 350,000 (approx. US$ 14 million). In the latter case (entities that are not SMEs but have sales of up to UF 350,000) the postponement of the VAT to be paid in March, April and June was made as of July in six monthly instalments.
2) Land tax
Apart from individuals owning land valued up to a certain amount, taxpayers that are undertakings whose annual sales do not exceed UF 350,000 (approx. US$ 14 million) will benefit from a postponement of the term to pay the land tax due in April, so that it may be paid over the next three duly readjusted instalments due in June, September and November.
3) Income Tax PPMs
Tax payers will be exempt from making monthly advance payments of income tax corresponding to April, May and June.
4) Advance payment in April to SMEs of tax refunds in relation to their annual income tax return due to be filed by 30 April 2020.
5) SME income tax payments are postponed until 31 July 2020.
6) SME Tax Regime Selection Deadline is extended until 31 July.
This is deadline to choose between the tax different tax regimes available for SMEs (regime contained in section 14 A or the regimes provided in sections 14 D 3 and 14 D 8).
7) Refund to independent professionals and other independent service providers of income tax withholdings made in January and February 2020.
8) Waiver of penalty interest and fines for late filing of income tax and VAT returns until 30 September, 2020. In addition, there will be a waiver of penalty interest and fines for taxpayers whose annual sales do not exceed UF 350,000 (approx. US$ 14 million) in relation to taxes due in April, May and June.
If you require more information, please do not hesitate to reach out to your corporate and tax contacts at Alessandri
Cristóbal Riffo, senior associate
Felipe Cousiño, partner