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Reconstruction plan now in force!
To address the consequences of the devastating earthquake on 27 February 2010, several tax measures have been enacted Law 20.455 which came into force on 31 July 2010. This new law contains several measures to finance the reconstruction of the zones most devastated by the earthquake.
Taxand Chile outlines the key measures and, in particular, what multinationals should consider.
(i) A temporary increase of the Corporate Tax ("First Category Tax") rate for income received or accrued in the calendar years 2011 (20%) and 2012 (18.5%), which is to return to the current tax rate (17%) in calendar year 2013.
(ii) An increase in the tobacco tax rate and the real estate tax applicable to the highest assessed properties.
(iii) A restriction on the benefits applicable to "economic housing".
(iv) An amendment to the "Cooper Reserved Law" to redirect resources formerly used for the exclusive benefit of the armed forces.
It is worth mentioning that a proposed amendment to the specific tax applicable to the mining industry was rejected by the Congress. Therefore, the government is currently evaluating the presentation of another bill in this regard.
Foreign investors should be mindful of the temporary increase to the corporate tax rate, which is currently considered one of the lowest rates in Latin America (17%). Please note that corporate tax is a credit against final taxation (35%) affecting remittance of taxable profits abroad, thus, the effective tax burden is not increased.
Your Taxand contacts for further queries are:
T. +56 2 3788933
T. +56 2 3788933
More news from Taxand Chile:
- In May / June issue of Taxand's Take we reported: Devastating Earthquake Leads to Changes in Tax Measures