Below you will find the more trades you relevant issued by the Internal revenue Service during the first half of July.
Income tax
i. Oficio N°1338 of 04/07/2024
The taxpayer query if the investment funds and mutual funds chilean (the “Funds”) can obtain in respect of dividends received from investments made in the united States of America rates discounted article 10 (Dividends) of the Convention between the Republic of Chile and the united States of America for the avoidance of double taxation of their Protocol and its subsequent diplomatic notes that the amended (the “Convention”).
Answer:
In accordance with what is established by article 81 of the Law which regulates the administration of third-party funds and portfolios for individual (single Act of funds or LUF), in conjunction with the Law on Income Tax, it follows that the Funds subject to the aforementioned article does not affect income taxes.
Then, the Convention is not applicable to such Funds, since they do not comply with the requirements of article 4 of the Convention to be considered as residents, in connection with the subject to tax in Chile. In consequence, investment funds, and mutual funds chilean cannot claim the benefits of the Convention, so that does not apply in respect of the rates discounted article 10 (Dividends).
ii. Oficio N°1339 of 04/07/2024
A company “Holding company”, which involved three shareholders are not related to each other, has investments in a number of projects through vehicles specially constituted for the purpose. The company is examining the possibility of incorporating a new investor is not related to the remaining shareholders of the company.
Considering the above, and with the aim of recognizing the right of the current shareholders (the “Shareholders”) have on the profits generated by the project, prior to the possible entry of a new investor, the directors of the Holding company is looking at various alternatives among which are (i) to perform a capital increase that will be paid using the direct capitalization of accounts receivable; and/or (ii) to agree on a distribution of retained earnings, and that each shareholder, freely choose if you subsequently capitalized or not the distributed assets as payment of such utilities.
Thus, the taxpayer requested to confirm the following:
(i) Form part of the cost of taxation of an investment for a shareholder, the capitalization of the accounts receivable.
(ii) The eventual distribution of profits in species and subsequent capitalization of the distributed assets is part of the right of option of the taxpayer, in obedience to a legitimate business reason and, therefore, not constitutive behaviors elusive in terms of the articles 4a, 4b and 4c of the Tax Code.
Answer:
With respect to the cost of taxation of the shares that are received as a result of the contribution of the account receivable, it is reported that this will correspond to the value of the contribution adjusted, without prejudice to the tax treatment applicable to a greater or lesser value obtained by the contributor in the disposition of the referral credit.
In respect of the eventual distribution of profits in species and subsequent capitalization of assets. The IRS argues that the realization of a distribution of profits that would be paid in species for which each shareholder of the Holding company may elect whether to subscribe or not a capital increase –that would be paid with the assets received in the distribution of profits– or choose between staying with the utilities and diluirse3 in the ownership of the Holding company, in principle, would be part of the legitimate right of option of the taxpayer to organize their activities, business or acts subject to the taxes of the way that the autonomy of the will and freedom of contract permit, considering that taxpayers do not have the obligation to choose that alternative that is more costly from the point of view of taxation.
In short, the mere execution of the acts that describes the taxpayer in your query does not constitute, in principle, a performance to be elusive in terms of the provisions of articles 4° bis, ter and c of the Tax Code, which is without prejudice to the specific circumstances of the case may change the above conclusion.
iii. Oficio N°1333 04/07/2024
The taxpayer requests the Service a ruling with respect to the year of departure of the regime of the society of professionals in the event of a breach of any of the requirements to qualify the taxpayer as a society of professionals, both for VAT as for the Income Tax.
Answer:
1) The societies of professionals who, by failing to meet the requirements to qualify as such, to lose this quality, they will lose the exemption under the N° 8 of the letter " E " of article 12 of the LIVS from the 1st day of the month following the occurrence of such breach.
2) As a result of failing to meet the requirements, a society of professional welcome to the rules of the second category will be taxed in the first category since the 1st of January of the year of the breach.