Renato Estay, Lead Partner for the Southern Region at CCL Auditores Consultores, and Agustín Brzovic, Legal Director of Tax Consulting at CCL.
Read the letter in El Austral de Osorno.
The Municipality of Osorno has attempted, within the scope of its legal powers, to charge business license fees to agricultural entrepreneurs in the area. However, the mistake (intentional or not) has been the use of public resources to initiate legal actions that improperly seek to tax agricultural activities that are exempt from such levies.
The Court of Appeals of Valdivia confirmed in a ruling that municipalities cannot require the payment of business licenses based solely on compliance with formal requirements, but must also prove that the activity involves a product processing component.
Therefore, municipalities have the responsibility to verify and duly substantiate the existence of a tax obligation. The conduct of the Municipality of Osorno in this case, and others, is unacceptable, unfair, and legally improper, as it has attempted to charge business license fees without legal grounds, relying solely on documents of its own creation and without sufficient evidence.
The recent ruling by the Court of Appeals of Valdivia offers a ray of hope, setting limits on improper actions by municipal public bodies and allowing taxpayers to carry out their economic activities with the legal certainty required by the country’s legal framework.