Tax Newsletter-December 2020

The main instructions issued by the Servicio de Impuestos Internos (SII) during the month of December 2020 were as follows:

Income

Administrative Notice No. 73 dated 12.22.2020

Instructs on the amendments introduced by Law No. 21,210 to the LIR and other legal regulations related to the new general tax regime on effective income under full accounting, effective as of January 1, 2020.

SII Exempt Resolution No. 151 of 09.12.2020

Regulates the validation of residence certificates issued by foreign tax administrations for tax purposes, in particular for the withholdings referred to in Article 74, point 4, of LIR and for the amounts subject to the refund obligation of Articles 14 A) and 63 of the same Law.

SII Exempt Resolution No. 153 of 10.12.2020.

Amends Ex. Resolution SII No. 106 dated Dec. 24, 2013, which provides the format of Affidavit Form No. 1887, and Ex. Resolution SII No. 110, dated Sept. 30, 2019, which provides instructions for completion of said forms.

SII Exempt Resolution No. 157 of 15.12.2020

Establishes special rules for the determination of provisional monthly payments to be made by companies under the context of Pro-SME support under Article 14(d) No.3(k) and 8(a)(viii), both of the LIR.

Exempt Resolution SII No. 161 of 16.12.2020

Instructs on the obligation to report balances of business income records by taxpayers subject to the pro-SME regimes of nos. 3 and 8 of subparagraph (d) of Article 14 of LIR.

Official Letter No. 2862 of 10.12.2020

Consultation on whether the method of determining the cost of sale by the formula commonly referred to as “inventory differences” is included in the current regulations.

Taxpayers in the first category that prove their effective income through a balance sheets in accordance with the provisions of Articles 29 to 33 of the LIR must use the methods expressly established in the second paragraph of Article 30 of the LIR to determine the cost of sales for the year and to value inventories. Therefore, for tax purposes, it is not possible to use the indicated alternative system for determining the cost of sales, nor is the SII authorized to approve it administratively.

Official Letter No. 2939 of 17.12.2020

Advice on the deduction of expenses for fees for services rendered to a company.

Fees paid or due for the provision of personal services agreed with a partner or shareholder of the company may be deducted as expenses provided that they meet the general requirements of the first paragraph of Article 31 of the LIR.

Value-Added Tax, Official Letter No. 2941 of 17.12.2020.

Advice on the tax obligations of a taxpayer (VAT) who pays for advertising services received in Chile, provided by a supplier not established in the country and taxed under Article 8, letter n), No. 4, of the Sales and Services Tax Law.

In accordance with the foregoing, and in light of the fact that Petitioner is a VAT taxpayer and receives advertising services in Chile that are taxed with VAT under Article 8, letter n), No. 4 of the LIVS, it follows that Petitioner is required to:

– Inform the foreign service provider of its VAT taxpayer status so that the foreign service provider does not withhold VAT.

– Issue the appropriate purchase invoice for the transaction and enter it in his purchase register.

– Declare the VAT in code 39 of Form 29, as per Article 11, (e), of the LIVS, entitling him to a tax credit under the rules thereon.

Other matters

SII Exempt Resolution No. 167 of 28.2.2020.

Establishes reporting requirements for non-bank issuers of payment card transactions as specified.

Alberto Panchana

Sepúlveda

Auditor Accountant from Universidad de Santiago de Chile – Master’s Degree in Tax Planning and Management from Universidad Adolfo Ibañez – Management positions and extensive experience in Compliance and National and International Tax Management – Tax Associate at Addval Consultoría Integral.