Taxation in Chile: Key Principles and Obligations
1. Impact of Taxes on Fundamental Taxpayer Rights
The application of taxes can affect the fundamental rights of taxpayers, specifically the principles of freedom and equality. The principle of freedom is affected when taxpayers are obligated to allocate resources to fulfill tax obligations, as mandated by the Internal Revenue Service (SII). This can limit their freedom to engage in other activities. The principle of equality is affected when a uniform tax rate is applied to all taxpayers, regardless of their individual circumstances.
2. Constitutional Principles of Chilean Tax Law
The constitutional principles enshrined in the Chilean Constitution regarding tax matters are:
- Tax law
- Tax equality
- Principle of non-involvement
3. Seven Key Themes in the Chilean Tax Code
Seven key themes within the Chilean Tax Code are:
- Taxes
- Fees (e.g., rental law)
- Accounting principles
- Audits by the SII
- Contributions
- Taxpayer obligations
- Administrative jurisprudence
4. Administrative Jurisprudence in Tax Matters
Administrative jurisprudence emanates from the SII, specifically its National Director. It is mandatory only for SII officers. Article 26 of the Tax Code provides a guarantee in favor of the taxpayer: if a taxpayer has acted in good faith, adhering to a specific interpretation of tax laws supported by the regional leadership in circulars, opinions, reports, or other official documents, they will not be subject to retroactive tax recovery.
5. RUT Registration: What It Is
RUT (Rol Único Tributario) registration is a national registry maintained by the SII. It assigns a unique serial number to each taxpayer, enabling their identification.
6. Deadlines for Initiating Business Activities
The deadline for initiating business activities is within two months of the first taxable event.
7. Steps for Initiating Business Activities
To initiate business activities, one must:
- Formalize the business through a public deed.
- Publish the deed in the Official Gazette.
- Register with the Real Estate Registrar (Conservador de Bienes Raíces).
- If applicable, register with the Superintendence of Securities and Insurance (SVS).
8. Termination of Business: A Multiple Obligation
The obligation to give notice of termination of business is considered a multiple duty because it involves not only providing notice but also submitting a final balance sheet and paying all applicable taxes.
9. Article 69: Termination of Business Notice
Article 69 of the Tax Code outlines situations that do not involve business activities but still require notice of termination. These include when individual firms become companies of any nature, where the newly created company assumes joint and several liability for all taxes owed by the individual firm, as stipulated in the respective articles of incorporation. It also applies to cases of contribution of all assets or liabilities or mergers of companies.
10. Significance of Tax Citation
A tax citation allows taxpayers to defend the accuracy of their accounting records before the SII.
11. Mandatory Tax Citation
A tax citation is mandatory when:
- A tax return has not been filed but should have been.
- The SII deems the taxpayer’s accounting records unreliable.
12. Settlement Without Citation
The SII can settle taxes without a citation when it can establish a discrepancy between costs and revenues and when it determines that the accounting records are not accurate.
13. Effect of Citation on Prescription Period
A tax citation extends the prescription period (statute of limitations) for the Treasury by three months. If an extension is requested, the period can be extended to four months.
14. Cases Where Settlement Cannot Be Rotated
The provided text does not specify cases where settlement cannot be rotated. Further information is needed to address this question.