Read the full article in Meganoticias.
What happened?
The Internal Revenue Service (SII) recorded a total of 212 changes in tax residency among high-net-worth individuals abroad, tripling previous figures. The SII considers high-net-worth individuals as those exceeding 6,000 UTA, equivalent to approximately US$5 million.
Information from La Tercera notes that in November 2021, the SII regulated the procedure for requesting a change of domicile, making it possible to more accurately identify taxpayers initiating this process.
This coincided with the discussion of the tax reform bill, which proposed a tax on high-net-worth individuals. This new tax would have applied to individuals domiciled or resident in Chile whose assets, both domestically and abroad, exceeded 6,000 UTA.
The design included a tiered structure with marginal rates: between US$4.9 million and US$14.7 million, a 1% rate would apply, and above US$14.7 million, a 1.8% rate would apply. In total, around 6,300 individuals would have been subject to this tax. The expected revenue was 0.5% of GDP.
Ultimately, the tax reform was rejected, and the government will not pursue this tax in the current tax pact process.
Requests for changes in tax residency tripled
Despite this, the figures show an increase in requests for changes in tax residency. According to the SII, between November 2021 and August 2022 there were 13 high-net-worth taxpayers; then, between August 2022 and January 2023, this rose to 35, totaling 48 tax residency change processes during that period.
Now, between February and September of this year, 164 more were added, bringing the total to 212 since the measure began. Thus, in these eight months of 2023, tax residency change processes more than tripled.
In total, from November 2021 to September 2023, a total of 700 taxpayers have initiated this process. Of these, 212 are high-net-worth individuals, while 488 belong to other segments.
The reasons behind changes in tax residency
Tax experts state that there are at least three reasons why individuals—especially high-net-worth individuals—decide to change their tax residency.
What do experts say?
Meanwhile, Javier Jaque, Tax Consulting Partner at CCL Auditores Consultores, adds that “the figures for changes in domicile are related to the instability projected into the future, because decisions to relocate abroad are not made overnight; these processes began as the country became more polarized.”
In this context, he notes that one of the factors is public safety, since indicators show that the perception of insecurity has increased. Chile is no longer the safe country it once was. This is an issue that plays a role in taxpayers’ decisions.