By Raúl Gómez, Tax Partner at CCL Auditores Consultores.
Read the letter in Diario Financiero.
Mr. Editor,
On May 23 of this year, the Internal Revenue Service (SII) issued Ruling No. 1,017, interpreting that an individual who acquires residential properties that meet the requirements of DFL No. 2 and leases them furnished cannot access a refund of the VAT paid on the acquisition of the property, as the lease would be exempt from such tax.
Up to that point, the interpretation seems reasonable, since VAT exemptions apply to income classified as non-taxable. However, SII units have extended this interpretation to individuals operating as Sole Proprietors (Individual Entrepreneurs – EI), resulting in the rejection of VAT refund requests.
In the most recent income tax filing process, the SII instructed that rental income generated from DFL No. 2 properties assigned to an EI should be taxed, taking a clear position on such income and even using examples of individuals who had previously recovered the VAT paid on the purchase of the property—something that now appears to have changed.
Therefore, it would be ideal for the SII to clarify this situation by indicating whether an EI can or cannot recover VAT on the purchase of DFL No. 2 properties. If not, it should also establish the procedure for refunding the income tax that taxpayers may have mistakenly paid in the most recent tax filing process.