Chilean IRS decided to publish the list for estimating that it is important information to facilitate the correct voluntary tax compliance of taxpayers, since the rating is relevant for the application of a series of rules of the Income Tax Law.

The list includes the Bahamas, Bermuda, Puerto Rico, Cuba, Qatar, Honduras, the Arab Emirates, Thailand, Taiwan, the Virgin Islands, the Cayman Islands and Hong Kong, among other territories.

The Chilean Internal Revenue Service published a preliminary list of 150 countries and jurisdictions that are considered to have a preferential tax regime or zero or low taxation, a rating that is relevant for the application of a series of rules included in the Income Tax Law (LIR)

The list was built after a rigorous analysis by the specialized teams of the agency that have participated in various international instances that analyze the tax issue and will be updated at least once a year to collect changes that may occur in the behavior of countries.

Its publication aims to provide certainty and facilitate the correct voluntary tax compliance of taxpayers, contemplating additionally the possibility of knowing and receiving the doubts, observations and recommendations of the different stakeholders.

The effect of considering that a territory or jurisdiction has a preferential tax regime is relevant to the practical application of different rules of the ITL, such as Article 14 letter E), No. 1, letter a), which establishes certain reporting obligations investments abroad; Article 41 F on excess of indebtedness; Article 41 G on controlled foreign entities that obtain passive income; and article 59 regarding a reduced rate of the Additional Tax for royalties and remunerations.

As an example, those who pay income or amounts consisting of royalties or remunerations for professional or technical work or services to people living in countries with preferential tax regime, should withhold the Additional Tax with a 30% rate, in the case of royalties, and of 20% for the remunerations, without it being appropriate to use the reduced rates contemplated in article 59.

The law prescribes that a territory or jurisdiction has a preferential tax regime, when it verifies the concurrence of at least two of a total of six requirements expressly stated, provided that they are not member countries of the Organization for Economic Cooperation and Development (OECD).

This allows maintaining a dynamic list that adjusts to the behavior of those jurisdictions over time, as it verifies the commitment assumed to comply with international standards in matters of transparency and exchange of information, as well as the clarifications requested by taxpayers for changes in the jurisdictions that are part of the preliminary list, among other elements that must necessarily be taken into consideration.

A good example of this is Liechtenstein, country included in the year 2003 in the list of countries or territories considered “tax havens”, by Decree No. 628 of the Ministry of Finance, a condition that remained in force without modifications until its current repeal .

The new list, however, takes into consideration for its classification that Liechtenstein signed the Multilateral Convention on Administrative Assistance (MAAT), which allows Chile to exchange information for tax purposes with that country; the rating of “substantially compliant” of the internationally accepted standards on transparency and exchange of information for fiscal purposes by the OECD, as well as that its legislation does not maintain a preferential regime for tax purposes, in accordance with the rating issued by this Same Organization.

The SII recalled that it carries out its processes of tax compliance analysis and case selection based on methodologies and technical disciplines of risk management of general acceptance, a framework in which transactions or transactions entered into with territories or jurisdictions with zero or low taxation receive a greater weight of risk and prioritization for the purposes of its treatment and remediation, which is in accordance with the standards that have been developed at the domestic and international levels.

Finally, it pointed out that taxpayers can consult the Service for compliance with the requirements established by the regulation, both with respect to the countries included in the list and those that are not included in the list, providing the necessary information so that the agency can pronounce in particular cases.

This information is also available in: Spanish