Is the Restructuration in the Large Taxpayers Directorate in Chile related to the Declared Affidavits 1907, Regardless of the Validating Technical Studies?

July 4, 2023

By Carlos Vargas Alencastre (CEO of TPC Group)

Apparently, the SII (Servicio de Impuestos Internos – Internal Revenue Service) would have observed that Large Taxpayers have employed a very common practice in certain sectors. On the one hand, there would be companies that never declared the Affidavit 1907 when they had to do it, and, on the other hand, there would be companies that declared the Affidavit 1907 without the Technical Study supporting the related party transactions if these would never be audited and would expire after some years and, finally, they would have detected Technical Studies prepared by offender important Firms. Regardless of the case, the SII would have decided to take the corrective announced measures, which are already publicly available.

Large Taxpayers Directorate

Nowadays, there are more than 3 thousand business groups in Chile, playing a fundamental role in tax collection, accounting for almost 66%. Therefore, the role of the Large Taxpayers Directorate is key, supervising and controlling the tax compliance of the 3,297 business groups in the country, which represent 65.6% of total tax collection.

Strategy for the Large Taxpayers Directorate Restructuration

Hernán Frigolett, the SII director, has led this restructuring through two approaches. The first one is explained by the change in the seat of work, which will no longer be on the review of each company as such but on generating a comprehensive knowledge of the business model of each business group. The second one is the division of three compliance areas, which will have to apply the Tax Management Model of the SII. According to this model, treatment actions must be applied based on the methodology for determining tax gaps and non-compliance risks, as well as a specific analysis of the business groups.

Other Large Taxpayers Directorate Areas

The Large Taxpayers Directorate also includes the Office of Facilitation and Assistance, which manages and resolves requests and general procedures for those included in the Large Taxpayers List; the Legal Department, which assists and advises the Large Taxpayers Directorate staff and supervises the correct application of the regulations; and the Department of Administrative Tax Procedures, which deals with and resolves complaints of tax infringements, among others.

Payroll Changes

The Large Taxpayers list will be composed of 132 large business groups, of which 12 must file the Country-by-Country Report. This change is part of the update of the incorporation criteria for companies and individuals to the Large Taxpayers payroll. Therefore, those belonging to a large business group with annual revenues or sales equal to or greater than 25 million development units, on average, considering the last three business years, and belonging to a multinational business group whose parent entity has tax residence in Chile and must file the Country-by-Country Report in Chile, will be included. Finally, those taxpayers included in the payroll list must remain for at least three years and may only request their inclusion or exclusion from the registry if justified.


Carlos Vargas Alencastre
CEO of TPC Group