The Chilean IRS created a new sworn statement, seeking additional information about related parties. This new statement is the first step in implementing the OECD's Base Erosion and Profit Shifting provisions. The new statement may be used to identify taxpayers for tax audits.

In several resolutions (published December 24, 2015), the Chilean IRS (Servicios de Impuestos Internos) created new sworn Statement (SS) No. 1913, Global Taxpayers Characterization, and revised SS No. 1851, Foreign Direct Investment, as a first step in implementing the OECD's Basis Erosion and Profit Shifting provisions. SS No. 1913 contains 24 specific questions about a taxpayer's tax and economic profile.

When completing SS No. 1913, a taxpayer must:

1. Indicate whether it is a Multinational Group Company (MNC) or the holding company of an MNC and, if so, whether it is a Chilean or foreign group

2. Indicate what percentage of revenues comes from transactions with related entities

3. Indicate what percentage of the earnings before interest, taxes, depreciation and amortization (i.e., EBITDA) is from expenses with related entities, such as royalties, interest, derivatives, management fees or any other expense, if the percentage exceeds 30% of EBITDA

4. Identify foreign related parties with no staff or relevant assets, and disclose the ones with which the taxpayer undertook transactions during the year under review

5. Provide information on corporate reorganizations, including transfers of functions or plans/schemes involving foreign companies (related or not) that occurred in the year under review

Because of the nature of the information required, this statement may be used to identify taxpayers for tax audits.

Taxpayers listed in the Large Business Division (Grande Contribuyente) must file SS No. 1913, as well as those considered large companies by the Chilean IRS. SS No. 1913 must be filed annually from 2016 onwards before filing the corporate return (Form 22), which is due in April.

SS No. 1851, Foreign Direct Investment (FDI), wasalso modified. On SS No. 1851, taxpayers must disclose FDI of US $100,000 or more (previously US $1 million). The information provided on SS No. 1851 will likely help the Chilean IRS apply the controlled foreign corporation rules.

———————————————