Corporate Tax (First Category Tax “FCT”) for Large Companies.
The partially integrated system is established as the only tax regime for large companies, with a rate of 27%. The right to use only 65% of the FCT paid as a credit against the final taxes is the rule now, however there is a exception to residents in a country with which Chile has a treaty in force to avoid double taxation, in which case they have the right to use 100% of the FCT as credit. Regarding the order of allocation of withdrawals, remittances or dividends distributions of profits
Imputation order and its tax effects.
In the chronological order in which withdrawals, remittances or distributions are made, until the positive balance of the RAI, DDAN and REX records is exhausted, in the order and with the effects listed below:
(i) Firstly, to the income or amounts recorded in the RAI registry, affecting the corresponding final tax.
(ii) Secondly, to the income or amounts recorded in the DDAN register, affecting the corresponding final tax.
(iii) Thirdly, to income with tax compliance, then to exempt income and then to income not constituting income, recorded in the REX registry, which will not be affected by any tax, considering in any case those made charged to income exempt from the complementary global tax for the purposes of progressivity established in article 54. In the event that the income is only exempt from the complementary global tax, and not from the additional tax, the tax will correspond to the latter.
(iv) Once the amounts indicated above have been exhausted, the allocation will be made to the balance sheet profits retained in excess of the taxable ones, as reflected in the balance sheet of the company at the end of the commercial year, affecting the corresponding final tax.
(v) Subsequently, after exhausting the retained balance profits in excess of the taxable ones, the allocation will be made to the capital and its adjustments, until the concurrence of the participation that corresponds to the owner in the capital. When the withdrawals, remittances or distributions are imputed to the capital and its readjustments, they will not be affected with any tax, according to article 17 number 7 .-, to the extent that the withdrawals, remittances or distributions imputed to the capital are formalized as decreases of capital according to the type of company in question. For this purpose, the capital decrease must be formalized no later than February of the year following the year of withdrawal, remittance or distribution. In the case of the individual entrepreneur, to make use of this imputation, the decrease in capital must be reported to the Service within the same period.
(vi) Finally, any withdrawal, remittance, or distribution that exceeds the amounts indicated above, will be affected with the corresponding final tax.
Provisional Payments for Absorbed Profits (“PPUA”)
The PPUA refund is gradually eliminated for the profits received from other companies that are absorbed by the losses of the receiving company, according to the following detail:
Year 2020: 90%
Year 2021: 80%
Year 2022: 70%
Year 2023: 50%
Year 2024 and following: 0%