The OECD’s highest taxation authority on Chile’s tax modernization: “We most decidedly support the tax reform that has been presented"

Treasury Minister Felipe Larraín met today with the Director of the Center for Tax Policy and Administration at the Organisation for Economic Co-operation and Development (OECD), Pascal Saint Amans, who is visiting Chile to participate in the 12th Plenary Meeting of the Forum on Tax Administration (FTA). The meeting was also attended by the Tax Modernization Coordinator at the Treasury Ministry, Carolina Fuensalida, and the Tax Policy Coordinator, Manuel Alcalde.

Mr. Larraín and Mr. Saint Amans conducted a thorough analysis of the Tax Modernization Project at this meeting and the OECD strongly supported the initiative, which was submitted to Congress by Minister Larraín in August last year.

"We most decidedly support the tax project that has been submitted. We see few challenges to full integration, as it returns to a system that is better known by other countries worldwide. We believe that this aspect is positive," said the Director of the Center for Tax Policy and Administration at the OECD.

He highlighted the positive effects of proposals in the TMP. He anticipated that "most of the measures in this tax project will have a positive impact on growth and employment". He also welcomed the modernization of the relationship between the tax administration, in this case the Internal Revenue Service (Servicio de Impuestos Internos, SII), and taxpayers.

He added that "from the OECD’s perspective, we would encourage the Government and Congress to adopt these measures. Tax reforms are always difficult, but we are confident that the positive aspects of the Government’s project should have a favorable impact".

Letter sent in January

Minister Larraín recalled a letter sent by the OECD in January this year supporting the TMP, stating the following.

"In our opinion, several measures contained in the proposed tax reform will support investment and growth". It highlighted several proposals, such as the return to a single fully-integrated tax system, the new and improved regime for small and medium-sized enterprises, rules designed to improve tax certainty, accelerated tax depreciation, and faster reimbursements of VAT on the acquisition of fixed assets.

This is likely to have a positive effect on investment and employment (…) in general, a single, fully-integrated tax system should support greater investment, restore neutrality, reduce tax compliance costs and provide greater tax certainty".

“We believe that this support from the OECD is very important, on the eve of next week's vote on passing into law the Tax Modernization Project", said Minister Larraín.

The Treasury Minister reiterated the Government’s willingness to discuss this project and emphasized the need to achieve broad agreement. “We are ready to move forward and we have been very flexible. (…) We want to reach as broad an agreement as possible in order to legislate - as broad as is the will of the people involved. We cannot force anyone who has always been against the idea of legislating. We have therefore been working with all the opposition members of Congress on the Treasury Committee and now it's time for each person to make their own decision", he said.