Resolution No. 1 eases the sworn statement requirement for beneficiaries who receive repeat payments from the same withholding agent.

On January 6, 2016, Chile's Internal Revenue Service (IRS) issued Resolution No. 1, modifying the sworn statement that a Chilean payer requests from a beneficiary resident in a tax treaty country in order to apply tax treaty benefits.

When there is a tax treaty, Chilean law (Article 74 No. 4 of the Income Tax Law) allows a Chilean withholding agent not to withhold or to withhold the relevant sum at a reduced rate, if the following requirements are met:

1. The income or amount remitted is covered by a tax treaty.

2. The income beneficiary proves its place of residence to the withholding agent by producing a certificate issued by the Competent Authority of the other contracting state.

3. The income beneficiary presents a sworn statement to the withholding agent declaring: (i) that it does not have a permanent establishment or fixed place of business in Chile to which such income may be attributed; and (ii) it is the effective beneficiary of the income (or a qualified resident in the contracting state), if so required by the treaty.

Under Resolution No. 1, the sworn statement must contain the following data: (i) information on the income beneficiary filing the statement; (ii) complete information on the representatives; (iii) legal name and Tax ID number of the income payer or withholding agent, including the last digit; (iv) statement filing place and date; (v) signature of the statement filer or its representatives. The statement also must indicate that it is issued with the purpose of applying the provisions of a tax treaty and identify the Contracting State. The statement date must correspond to the month in which income or amounts are paid, distributed, withdrawn, remitted or paid to an account or put at the disposal of the beneficiary of the income.

The sworn statement must clearly and expressly indicate that the income beneficiary: (i) does not have a permanent establishment in Chile upon the statement filing; and (ii) if so required by the tax treaty, it is the effective beneficiary of those amounts, or a qualified resident in the other contracting state.

Additionally, Resolution No. 1 establishes a new procedure applicable when a withholding agent regularly remits payments to the same beneficiary in more than one period. Under the new procedure, the foreign beneficiary may issue an initial sworn statement in the first period in which the beneficiary receives payments stating: (i) the start date of the contract; (ii) the nature of the transactions that will be completed; (iii) the frequency of the transactions; and (iv) the contract period.

Also, every December 31, the foreign beneficiary must issue another sworn statement stating that the circumstances described in the initial sworn statement are the same.

This new procedure for sworn statements eliminates the requirement of having the sworn statement signed before a notary public or a Civil Register official in Chile, or, if issued abroad, having it signed before a notary public or ministry of faith.

———————————————