Being registered under this structure, they are not required to pay the tax that came into effect on January 1 of this year. According to data provided by the Internal Revenue Service (SII), by the end of the first quarter, 8,792 taxpayers had declared themselves as Professional Partnerships through the special application “Extraordinary Registry of Professional Partnerships.”
Read the full article in La Tercera-Pulso.
With controversy and numerous complaints from professional associations and business groups, the legislation that applies the 19% Value Added Tax (VAT) to all those who provide any type of services came into effect on January 1. The law maintained existing exemptions for individuals who issue fee-based invoices, who will experience no changes in their operations, as well as for other services already exempt under the Sales and Services Tax Law, such as passenger transportation (urban, interurban, interprovincial, and rural, among others) and education (schools, kindergartens, universities, among others).
Additionally, the new law exempted outpatient healthcare services (medical consultations, dental services, psychologists, psychiatrists, physiotherapists, imaging services, among others) from VAT.
However, the regulation also left a window open so that, under a certain legal structure, other services could be exempt. Thus, from January 1 until June 30, 2023, professional partnerships may properly register with the Internal Revenue Service (SII), thereby becoming exempt from the aforementioned tax.
To do so, they must meet a series of requirements. The SII detailed that they must be composed only of natural persons, meaning they cannot be companies, although they may associate with other professional partnerships. The partners must exclusively provide professional services and may not engage in activities such as trade.
Furthermore, all partners must practice the same profession within the partnership or a similar, related, or complementary profession, and partners who only contribute capital are not accepted. If all requirements are met but the partnership is not registered with the SII as a Professional Partnership, it may still opt for this simplified procedure. In the case of partnerships registered in the Business Registry of the Ministry of Economy, the SII has explained that the change can be made through the companies and partnerships registration platform, and then registered as a Professional Partnership with the SII.
What the figures show
According to data provided by the SII, by the end of the first quarter, 8,792 taxpayers had declared themselves as Professional Partnerships through the special application “Extraordinary Registry of Professional Partnerships.”
Expert opinion
Javier Jaque, partner in Tax Consulting at CCL Auditores Consultores, adds that “the companies that could transform into professional partnerships represented a broad universe, and many have already adopted this new structure. That is why we saw a boom in January, followed by a slowdown. The trend will likely continue downward.”