An important first-instance ruling has marked a significant milestone for the land subdivision and development industry in the context of the Chilean Internal Revenue Service’s (SII) application of the General Anti-Avoidance Rule (GAAR). The primary issue under review concerned the application of Value Added Tax (VAT) to construction activities within these types of projects.
Although the case remains subject to appeal, the ruling establishes fundamental criteria that provide greater legal certainty for the sector, particularly regarding the circumstances under which tax simulation may be deemed to exist. The decision emphasizes that demonstrating a legitimate business purpose is the key factor in validating both the legality and economic rationale of these real estate transactions when challenged by tax authorities.
This ruling represents a significant precedent for the interpretation and application of the GAAR in land subdivision and development projects, an area that continues to generate considerable debate among both tax scholars and practitioners.
CCL Auditores Consultores’ legal team, composed of Jaime Preiss, Partner of Tax Legal Consulting; Agustín Brzovic, Director of Tax Consulting Legal Services; Carlos Tapia, Director of the Corporate Tax Division; Gustavo Martin, Senior Attorney in the Litigation Practice; and Paola Ambiado, Senior Tax Consulting Attorney, actively led the technical defense of the case. Their work contributed to establishing a strong judicial criterion that directly benefits the predictability and development of Chile’s agricultural land development industry.
CCL highlights this important technical and professional achievement, which contributes to greater regulatory clarity and legal certainty for the sector.