The tax year coincides with the calendar year.
The tax system is one of self-assessment by the taxpayer, with occasional auditing by the tax authorities. Annual tax returns must be filed with the Chilean IRS before 30 April of each year with respect to the operations of the previous calendar year.
Note that there are many other sworn statements with different deadlines, from March until June of each year.
Payment of tax
Taxes are payable when the annual tax return is submitted in April of each year. Taxpayers, in general, are subject to monthly advance payments on account of their annual income taxes. The difference between the advance payments and the final tax bill is payable in cash at the time the tax return is filed. If prepayments exceed the final tax bill, the excess is reimbursed by the Treasury.
Tax audit process
Generally, the Chilean tax system is based on self-assessment; however, many large businesses are under continuous audit by the Chilean IRS. Businesses and individuals are also generally subject to audit on a random basis.
Statute of limitations
As a general rule, the statute of limitations is three years. However, it can be extended to six years if no tax return was filed or if the tax return was maliciously false.
Topics of focus for tax authorities
The tax authority is currently focused on transfer pricing issues, the implementation of the 2014 Tax Reform, and the issuance of materially false invoices for politic financing purposes.
General Anti-Avoidance Rule (GAAR) provisions
The GAAR provisions grant the Chilean IRS the power to request to the corresponding Tax Court the disallowance of the tax benefits obtained from abusive tax planning. If the tax judge considers that the taxpayer has acted in an abusive way or is simulating a conduct in order to obtain certain tax benefits, the taxpayer will have the obligation to pay the corresponding taxes, interest, and penalties as if the abusive or simulated conduct never existed (substance-over-form principle).
A consultation procedure is available pursuant to which taxpayers may ask the Chilean IRS to determine whether or not a transaction may fall under the GAAR provisions.
According to Law N° 20,899, GAARs will not apply to those transactions whose main elements have been set before the entry into force of these rules (i.e. 30 September 2015), whilst they will apply to transactions executed or concluded before the entry into force of the GAAR provisions but that are amended after such date.