Tax specialists consider that the second set of amendments presented by the government does not aim to resolve the core issues that have been criticized in the proposal so far.
Read the note in La Tercera-Pulso.
Some experts valued the amendments submitted by the government this Tuesday to the tax reform, but on what all those consulted agree is that these proposals will not untangle the knots that the initiative still faces in order to move forward.
The Tax & Legal Leader partner at Deloitte, Hugo Hurtado, asserts that with these amendments “the core of the matter is not addressed.” One of the main proposals of this second set of amendments is precisely the establishment of a new tax credit fund. Regarding this, Hurtado says that “it is an innovative idea, it can be reviewed, but we believe that the impact that the tax reform will have on growth does not align with these improvements being implemented, which, in our opinion, are minor (…) The reform must be redesigned and see how more revenue can be collected without affecting growth and investment. And definitely, this reform is not on that path.”
For the FEN academic at the University of Chile and advisor to Deputy Miguel Mellado (RN), Jorge Hermann, the main proposal made by the Executive in these amendments is not well-conceived: “The Law on Tax Benefits for Sustainable Investment is a hidden industrial policy that will benefit a specific investment sector related to energy decarbonization and new technologies, creating more state bureaucracy with a three-member committee paid and a technical secretariat, duplicating the efforts currently carried out by Corfo.” He believes that “it would be more appropriate, if one wants to persevere in this area,” for Corfo to provide subsidies for green investments.
Additionally, Hermann explains that “the tax credit is on corporate tax payments. However, in many cases investment projects have losses in the first years and will take time to utilize this benefit, so it would be advisable to extend it to other taxes such as VAT, for example, or simply provide subsidies for productive development through Corfo.”
Meanwhile, the partner at Cabello Abogados Tributarios, Juan Pablo Cabello, states that “apart from the credit for investment projects, these are modifications or adjustments that are not substantive or structural. From this perspective, it is not appropriate to understand that these amendments could unblock the discussion in Congress. Positions between the government and opposition will continue to clash, and the discussion on eliminating relevant aspects of the reform, which have generated much noise, will persist.”
Regarding the Inheritance and Donations Law, the director of the Tax group at Aninat Abogados, Paula Madariaga, criticizes that the amendments “do not substantially simplify the valuation of companies or assets owned by heirs to determine the tax base for this tax. In this sense, the declaration system is not simplified, so unintentional noncompliance by taxpayers due to lack of information regarding the rules governing this matter is possible. Likewise, concerns remain regarding the difficulties in declaring and paying this tax.”
Regarding the new tax credit law, the partner at CCL Auditores Consultores, Javier Jaque, maintains that “conceptually it is certainly interesting, but I am not so sure that it will be an element that allows unblocking, since, from my perspective, it may not be considered a relevant element.” This is because it indicates that the proposal does not address the core of “the problem raised,” which “relates to whether this is the right time to carry out a revenue-focused reform.”