By Javier Jaque, Lead Partner at CCL Auditores Consultores.
Read the letter in Diario Financiero.
In this Wednesday’s edition of Diario Financiero, an article is included addressing the main points and estimates contained in the widely discussed report by the Internal Revenue Service (SII), prepared by its former director, Michel Jorratt, together with the agency’s research team, regarding the compliance gap in VAT and First Category Income Tax.
Regarding the aforementioned article, I would like to add that, in my opinion, the report confuses the concepts of avoidance, evasion, and unintentional non-taxation with the erosion of the income tax base.
It is well known that the Chilean tax system has an eroded base due to various exemptions that have been the focus of reports by different groups of economists. However, while this represents a gap compared to a theoretical level of tax collection, there is insufficient evidence to conclude that it corresponds to evasion or avoidance.
Furthermore, as the article rightly notes, there are differences and uncertainties regarding the methodology used, particularly in relation to depreciation, investment funds, tax losses, and benefits for SMEs, among other concepts. Therefore, I believe it is necessary to clarify the methodology and assumptions applied.
On the other hand, corporate tax figures—already above the OECD average—raise doubts about a 50% rate of evasion or avoidance. These figures are so large that, from a reasonableness perspective based on OECD averages, they themselves appear to contain a gap.