Tax reform
Income Tax: Taxation Regimes and commercial year rates 2017.
- Attributed Income System Letter A) of Article 14
As of January 1, 2017, the regime set forth in letter A) of article 14 of the Income Tax Law, which consists of a system in which the income obtained by the company, is attributed for the taxation of owners , members, partners or shareholders from the companies in which they participate, in the same year in which said income was generated by the company.
At the company level, year by year it determines its taxable net income, income to which will be applied a rate of First Category Tax (Impuesto de Primera Categoría,IDPC) of 25% for their incomes of business year 2017 and the same rate for their Income for the years 2018 and following.
Regarding the integration, under this regime the IDPC paid by the companies is 100% integrated with the final taxes to be paid by its owners, since the credit granted by the IDPC paid by the companies is 100% of said tax when Impute to final taxes to be paid by their owners, Global Supplemental Tax (natural person income tax) or Additional Tax (non residents withholding tax). However, unlike the partially integrated regime, the owners will be taxed for the income attributed to them by the company in which they participate in the same year in which the company generates the income, completing the taxation of the company and its owners in a same period, regardless of whether the owners received said income by making a withdrawal or receiving a dividend.
- Partially Integrated Regime of Letter B) of Article 14.
As of January 1, 2017, the regime established in letter B) of article 14 of the Law on Income Tax, which consists of a system that obligates the taxation of owners, community members, Partners or shareholders from the companies in which they participate, only to the extent that they withdraw profits or distribute dividends.
At the company level, year by year it determines its taxable net income, income to which will be applied a rate of First Category Tax (IDPC) of 25.5% for their incomes of business year 2017 and 27% for their income for the years 2018 and following.
Regarding the partial integration, under this regime the IDPC paid by the companies is not integrated with the final taxes to be paid by their owners, since the credit granted by the IDPC paid by the companies is only 65% of said tax when to be imputed to the final taxes to be paid by their owners, Global Supplemental Tax or Additional Tax. Notwithstanding this, the credit may be used 100% if the owners of the company are resident in countries with which Chile has signed an agreement to avoid double taxation.
In CFA we determine the net taxable income of the companies and we review the corresponding taxation year by year to our Clients, together with a complete and accurate tax advice.