As part of the objectives of the International Operations Tax Audit Plan of the SII (Servicio de Impuestos Internos de Chile – Internal Revenue Service/IRS), tax audits are being carried out due to abuses of agreements for the avoidance of double international taxation.
Background
In 2022, the report entitled “En el Radar: Operaciones Internacionales en los análisis del SII” (On the Radar: International Operations in the SII’s analysis) published that one of the risks is the abuse of such agreements.
Relevant Cases
Within a period of nine months, cases of tax audits conducted by the SII were given. The most relevant points will be analyzed below:
- The case of a company that, with an international reorganization, changed the shareholding entity of a Chilean company, establishing a new company domiciled in Spain.
- o In this case, it was necessary to know if the entity in Spain was the effective beneficiary of the dividends paid from Chile, for which much information related to the activities of the Chilean company in Spain was requested.
- o On the other hand, related party transactions from Chile to the “shareholder” in Spain, and others from Spain to Chile, were analyzed. After an exhaustive audit, it confirmed that the final beneficiary of the dividends paid was the majority shareholder entity in Spain, for which the SII did not issue any observations.
- The case of a beneficial owner of another type of payment abroad, but derived from services and royalties.
- o In this case, the SII also requested considerable information from the foreign entity, such as financial statements, analysis of payments from Chile abroad, and affidavits. Therefore, it is important to have prior advice to respond to an audit process within the established deadlines and avoid fines.
Source: Diario Estrategia 01/03/23
