Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

June 17, 2021
2021-5682

Chilean tax authorities issue resolution amending regulations for claiming reduced withholding rates

The Resolution modified the sworn statement, including when the foreign beneficiary of a cross-border payment must deliver the statement to the local taxpayer.

On 11 June 2021, the Chilean tax authorities (CTA) issued Resolution Ex. No. 58 of 2021 (Resolution), amending the regulations for complying with the local tax requirements to claim reduced withholding tax (WHT) rates when a double tax treaty (DTT) applies. The amendments are based on changes introduced by Law 21,210 of 2020.

According to the regulations, local taxpayers that want to apply a reduced WHT rate or no WHT rate on a cross-border payment must request the following from the foreign beneficiary receiving the payment: (a) a tax certificate of residence issued by the competent authority of its country; and (b) a sworn statement declaring that it (i) does not have a permanent establishment in Chile to which the income can be attributed; and (ii) meets the requirements to claim treaty benefits.

The Resolution modifies the regulations on the sworn statement that foreign taxpayers need to produce and deliver to local taxpayers to claim DTT benefits. Specifically, the Resolution includes updated templates of the sworn statement that need to be used by foreign taxpayers to comply with this requirement.

The Resolution also requires the foreign beneficiary to deliver the sworn statement to the local taxpayer before the local taxpayer files its WHT filings. The local taxpayer must file the WHT filings on or before the 12th day of the month following the payment. Previously, the regulations required the sworn statement to be delivered within the month of the cross-border payment being made.

Additionally, the Resolution reduces the penalties for failing to deliver the sworn statement or satisfy the compliance requirements. If the sworn statement is not delivered or the compliance requirements are not satisfied, the local taxpayer will generally have to apply a WHT rate, according to domestic provisions (i.e., without any relief derived from the DTT). However, the foreign beneficiary may request a tax refund of the excess WHT applied if conditions to claim the DTT benefit are later demonstrated. Before the Resolution, the regulations did not allow the foreign beneficiary to claim a tax refund and considered the requirements to claim DTT benefits not satisfied.

Local taxpayers are deemed jointly liable for the foreign beneficiaries’ WHT liability if Chilean tax authorities challenge the application of a DTT benefit.

____________________________________

For additional information with respect to this Alert, please contact the following:

EY Chile, Santiago
Ernst & Young LLP (United States), Latin American Business Center, New York
Ernst & Young LLP (United Kingdom), Latin American Business Center, London
Ernst & Young Abogados, Latin American Business Center, Madrid
Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific
 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more