Chile Tax News, Reactivating the economy

On September 2, 2020, Law n° 21.256 was published and went into force. It includes several taxable updates to help reactivate the economy in Chile. The main updates are:

1) Temporal reduction of the income tax rate to 10% for companies classified as Pro Pyme under article 14, letter D) of the Income Tax Law. For the income received or accrued on the years 2020, 2021 and 2022 and as a consequence to this a deduction of 50% for the monthly income tax pre payments.

2) Refund of the Credit VAT accumulated between January and May 2020, for companies classified as Pro Pyme, which had an average deduction of the 30% of their income compared to the same months of 2019.

3) Total depreciation of the assets from Property, Plant and Equipment of a company and certain intangibles which were purchases from June 1, up to December 31, 2022, will be allowed as taxable expenses.

4) The payment of VAT for the rest of the year can the postponed between two to three months.

It’s important to note that this update is only for companies classified as Pro Pyme under article 14, letter D) of the Income Tax Law, which comply with the following requisites:

i. Average sales for the last three year under approximately USD 2.500.000;

ii. Taxable equity lower than approximately USD 3.000.000;

iii. The income from investment activities in property, plant and equity is lower than the 35% of their
total income.