22/03/23

SOUTH AMERICA: Tax reform rejected by Chilean Chamber of Deputies.

As published on step.org/industry-news, Wednesday 22 March, 2023.

The Chilean Chamber of Deputies has rejected the tax reform Bill that was proposed by the government in July 2022.

The government reform proposals promised a reduction in instances of tax evasion and the strengthening of various anti-avoidance measures. At the time, the Ministry of Finance of Chile said that the reform proposals were influenced by the OECD’s June 2022 report reviewing the country’s tax policies.

Further, it aimed to increase revenues by around 3.6 percent of the country’s GDP through various amendments to the tax system. These included the introduction of a wealth tax on the top 3 percent of the country’s highest earners, an increase in personal tax rates and a new tax on investment companies’ retained earnings.

However, on March 8, 2023 the Chamber of Deputies rejected the Bill, ending its legislative progress through the Congress of the Republic. The government could now choose to move the Bill forward in the senate, although doing so would require the approval of two-thirds of the senators.

Alternatively, the government will have to wait for the period of a year before submitting another Bill of tax reform covering the same issues. According to accountancy EY, the Minister of Finance of Chile has indicated that this is the more likely route for the government to choose.

EY notes that “the funding of the most important initiatives to be put forward by the Government depended on the…additional revenue that the tax reform aspired to” and so it is to be expected that the same or similar measures will be put forward in a refiled Bill after a year.