SII: Tax Collection and Transfer Pricing

May 8, 2024

Tax Collection

According to the “Tax Compliance Management Plan 2024” report issued by the SII (Servicio de Impuestos Internos – Internal Revenue Service/IRS), the tax collection 2023 exceeded set expectations, recording a 39.8% increase over the previous year. This result arises from a particular approach to high-risk taxpayers, such as Multinational Companies, Business Groups, and High Net Worth Individuals.   

Management Strategies

The successful result in 2023 results from the implementation of specific strategies established by the SII, such as the strengthening of its auditing abilities in international matters, recording a 5.5% increase in audits compared to the previous year, focused on restructuring scenarios and tax planning of business groups. Likewise, by 2024, the SII will continue strengthening the experts in Transfer Pricing, company appraisals, and high net worth to reach a 1.4 billion Chilean pesos goal. 

Transfer Pricing Significance

Based on the above, we can note the importance the SII attaches to Transfer Pricing as a source of tax revenues, highlighting the advances in the current legislation since the implementation of the Organization for Economic Co-operation and Development (OECD) guidelines.   

Therefore, taxpayers must correctly identify their tax obligations, especially those related to Transfer Pricing, among which are the Annual Transfer Pricing Affidavit (Form 1907), Annual Local Report Affidavit (Form 1951), Annual Master File Affidavit (Form 1950), and Annual Country-by-Country Report Affidavit (Form 1937), which expire on June 28. Although the SII extended the deadline until the end of September last year, taxpayers should advancedly analyze transfer prices to avoid inconveniences due to fines or penalties for non-compliance or possible contingencies.  

Conclusion

The SII has been reporting successful results due to its collection strategy, as well as advances in the specialization of its auditing processes, planning to continue with this approach by 2024, in addition to streamlining administrative processes to detect and fight tax evasion practices. Consequently, taxpayers should not only focus on complying with their tax obligations but also have specialized advice to back up the information reported in an eventual tax audit