Between 2023 and 2024, 134 claims have been filed before the Tax and Customs Courts (TTA). Of these, 40 rulings have been issued, all of them favorable to taxpayers. The remaining cases are still pending in court. The SII dismisses this as a widespread issue, considering that the total number of owners of assets subject to this tax reaches 12,000. “Litigation related to this tax is limited.”
Read the article in La Tercera-Pulso.
The low revenue generated by the luxury tax has sparked controversy. In January 2022, when it was approved, annual revenue was projected at 0.05% of GDP, approximately US$119 million ($118.213 billion).
However, according to figures from the General Treasury of the Republic, since this tax came into force—between 2023 and October 2024—actual revenue has been $32.564 billion, around US$33 million, well below expectations.
This is an annual tax for fiscal benefit created as a funding source for the Universal Guaranteed Pension (PGU). It applies at a 2% rate to the ownership of helicopters, airplanes, yachts, and automobiles with a fiscal valuation equal to or greater than $40 million as of December 31 each year.
According to tax lawyers, one of the reasons for the lower-than-expected revenue is the lack of a regulation clarifying how the tax operates, which has led many of the charges issued by the Internal Revenue Service (SII) to end up in court.
According to Barrientos Abogados, based on data from the Tax and Customs Courts (TTA), in 2023, 60 claims were filed, of which 21 have rulings favorable to taxpayers and 39 remain unresolved. In 2024, 74 claims have been filed, of which 19 already have rulings favorable to taxpayers and 55 remain pending.
“Between 2023 and 2024, we already have 40 favorable rulings, which have upheld tax claims and annulled the assessments issued by the Internal Revenue Service,” said Jaime Barrientos, partner at Barrientos Abogados.
The lawyer explains that one of the central arguments presented in court is the lack of a regulation defining how this tax should be applied. However, this was not initially addressed, and the Executive opted to clarify it through the Anti-Evasion Law.
According to Barrientos, “the new law has granted the Internal Revenue Service the power to unilaterally set the limits of the tax base, which clearly affects constitutional guarantees. In our view, the approved regulation is unconstitutional in every respect,” he stated.
The SII provided figures to clarify that the number of cases taken to court is limited and not widespread, considering the total universe of assets subject to this tax.
First, they point out that the total number of owners of assets subject to this tax slightly exceeds 12,000: 69% correspond to automobiles, 25% to helicopters and airplanes, and 6% to yachts. “Litigation related to this tax is limited,” they stated. They also added that “in the vast majority of cases where taxpayer arguments have been upheld, this was due to the absence of a regulation, an issue that was resolved through an amendment in the Tax Compliance Law, which clarified the rules.”
Carlos Tapia, Director of the Corporate Tax Area at CCL Auditores Consultores, identifies several shortcomings that explain the difficulties in applying this tax. One is the previously mentioned lack of regulation, which results in the absence of “clear rules on asset valuation, which in practice has affected proper assessments and created uncertainty regarding the applicability of certain exemptions, such as the principle of indispensability for certain assets.”
Another explanation for increased litigation is provided by Ignacio Gepp, partner at Puente Sur, who raises the following point: “The tax does not apply when the asset is owned by a company and used in its business operations. Therefore, many individuals in Chile may have held such assets under a company structure rather than personally. This may be creating discrepancies between the tax authority and taxpayers when applying this tax.”
The SII states that it has appealed to “higher courts” regarding the rulings of the Tax and Customs Courts, as it maintains that “the issuance of luxury tax assessments has complied with a correct application of the principle of legality in tax matters, since the tax has been applied in the presence of all its elements, clearly defined by the legislator. Consequently, the Service has acted within its powers, without exceeding them.”
They also noted that “according to the SII’s position, the regulation of the tax meets the constitutional standard of legal reservation, with all elements of the tax clearly defined by the legislator.”