By a large majority, the Chamber of Deputies passed into law the Tax Obligations Compliance bill, after approving the amendments introduced by the Senate, which approved the initiative in particular the previous day. This bill, which was sent on January 29 of this year and began to be processed in March, is a substantial pillar of the Pact for Economic Growth (Fiscal Pact) and is part of the economic fast track prioritized by the Government.

In his speech in the Chamber, the Minister of Finance, Mario Marcel, recalled that this initiative “is part of a much more ambitious package (Fiscal Pact), which not only aims to ensure compliance with tax obligations or to level the playing field for small companies that comply with their obligations and generate additional resources to invest in social matters. This is the most complete and comprehensive tax compliance bill that this Congress has seen in many years”.

In general, this project contemplates a series of measures related to strengthening the auditing function to combat tax evasion and avoidance, modernizing tax administration, making the lifting of banking secrecy more flexible, strengthening the Taxpayers' Ombudsman's Office, facilitating taxpayers' compliance with their tax obligations, tackling informality and improving the governance of the Internal Revenue Service (SII), among other matters. The implementation of these proposals seeks to generate a collection of 1.5% of the Gross Domestic Product (GDP) to finance the social priorities of President Boric's program. 

Likewise, the Undersecretary of Finance, Heidi Berner, highlighted the advances in institutionalism: “This project represents an important step forward in terms of strengthening the services in charge of tax administration: Internal Taxes, Customs and Treasury, both in terms of staffing, mobility and technological resources as well as in terms of attributions and modernization of their procedures”.

The broad majority in favor of the bill is due to the successive instances of dialogue that were opened during the legislative process, since in the first procedure in the Finance Committee of the House of Representatives, an advisory board was formed, and then, in the Finance Committee of the Upper House, there was a second advisory board, whose work resulted in the presentation of almost 70 indications by the Executive, most of which were approved by a wide margin. 

 “This is a moment that allows us to show that, even less than a month before an election, we are capable of agreeing on important reforms that aim to generate equity in tax compliance, close gaps, level the playing field and have greater tax justice. And, on the other hand, to provide resources to respond to the needs of the citizens, including the increase of the PGU in the pension reform project, investment in citizen security and in the budget for 2025 to finance matters related to health and care”, added Minister Marcel.

With the Tax Obligations Compliance project, tax collection is estimated at 1.5% of GDP, equivalent to approximately US$4.5 billion, in regime, with which it will be possible to finance the increase of the Universal Guaranteed Pension (PGU) to $250,000 (1.2% of GDP) and meet the commitments in terms of public safety. Together with the resources collected from the mining royalty, public spending on security will be increased by US$ 1.5 billion, totaling a 40% increase in public investment in security compared to 2022.

The Minister Secretary General of the Presidency, Alvaro Elizalde, highlighted the approval of this initiative: “We celebrate the approval of this project, which is very important and enshrines a basic principle: Even law is not hard law. That is to say, that everyone in Chile complies with tax legislation equally. And therefore, it provides tools to face evasion and avoidance. With this law, we will also have additional resources to finance very important social challenges”.

Also, Undersecretary Macarena Lobos said: “As the Ministry of the General Secretariat of the Presidency, we contribute to the dispatch of this important initiative that will allow financing government commitments that will significantly improve the lives of Chilean men and women. In this context, we will continue to promote agreements for a responsible and diligent processing of projects aimed at improving the public, economic and social security of citizens. We are grateful for the willingness of all political sectors in Congress and we hope that this spirit will be replicated”.

Content of the project

From the work carried out in both chambers, 24 matters were approved by a large majority, among which the following stand out: the control of business groups, the possibility of establishing traceability in the trade of goods, the extension of the precautionary measures that may be requested by the Internal Revenue Service (SII) and the rules for strengthening the Taxpayer's Ombudsman (Dedecon), among others. 

Regarding the areas where there were modifications, the changes to bank secrecy stand out, for which the simplified procedure is maintained without opposition from the taxpayer, and the general judicial procedure is modified, improving its terms and suspending the statute of limitations in favor of the tax authorities. In this way, the lifting of bank secrecy is harmonized with the auditing procedures as a fundamental tool.  

Likewise, in the General Anti-Avoidance Rule (GAR), the procedure in the administrative and judicial stage was improved, leaving a coherent regulation without procedural gaps, ensuring its correct implementation in the fight against tax evasion. Meanwhile, the reward for the anonymous whistleblower was maintained, setting a floor for its application when the defrauded tax exceeds $80 million (100 Annual Tax Units). 

The governance of the Internal Revenue Service was also improved by incorporating a Tax Council that will give its opinion on the Tax Compliance Management Plan and the circulars submitted to public consultation, however, the interpretation of the tax law will remain within the powers of the Director of the Service.  

Recognizing the importance of SMEs in the economy, the bill includes several measures to alleviate their tax burden and facilitate compliance. Among them, the interest rate on tax debts will be reduced from 1.5% per month to a daily variable rate that will be set every six months by the SII; SMEs will be allowed to access preferential agreements for the payment of debts in 18 installments, with an initial footing of no more than 5% and remission of interest and fines; a rule will be introduced to declare the uncollectibility of tax debts older than 10 years and to request ex officio the prescription of prescribed debts.

The powers of the Taxpayer's Ombudsman's Office will also be expanded, increasing its staff by more than 50% to provide better legal assistance and support to taxpayers; judicial representation will be allowed in proceedings for the violation of taxpayers' rights; and a simplified procedure will be established for the termination of the operations of SMEs, facilitating the orderly closure of their operations.

In addition, key tools are introduced to formalize the economy and improve oversight, such as the obligation for digital platforms, payment portals and public entities to require their users to initiate activities, as well as to report the operations carried out through them; and it will be established that all foreign digital platforms will be subject to the payment of Sales and Services Tax (VAT) for the goods traded. The SII will be empowered to implement traceability systems on any type of good, with the fiscal cost to be paid by the State; and banks must require the start of activities for credit operations. In turn, banks will have to inform the SII about taxpayers who receive in the same day, week or month, 50 or more transfers from different persons or 100 within the same semester and the aggregate amount of the reported transactions. Finally, traders of used goods will have to identify their suppliers.

After this last legislative procedure, the bill is ready to be enacted and become a law of the Republic.