President Piñera announces the modernization of the tax system and 13 measures to encourage growth, investment and job creation
The President spoke on national radio and television networks to share these proposals with the nation.
President Sebastián Piñera announced on Tuesday that he had signed a bill to modernize the taxation regime and introduce 13 measures that the Government believes will encourage growth, investment and job creation, in order to stimulate development in Chile.
The President emphasized that the Chilean economy grew by 5.3% in the second quarter and investment grew by 7.1%, making Chile one of the most dynamic countries in Latin America. He emphasized, "this translates into better jobs, wages and opportunities, which we must strengthen going forward".
"The creation of good jobs, increased wages and opportunities for all is and will continue to be at the heart of our priorities," said the President.
The measures announced encompass the following objectives:
- Create a simpler, sole, equitable and fully integrated tax system that applies to all Chilean companies, except for a more generous regime for SMEs, with lower tax rates. The taxes paid by companies will be credited against the taxes payable by individuals, which will benefit over 150,000 SMEs and a large proportion of the middle class, and will make life easier for taxpayers.
- Establish investment and economic growth incentives using accelerated depreciation or even instantaneous depreciation for all companies, and improve incentives for the Araucanía Region.
- Encourage SMEs to develop by subjecting them to a simpler and easier to understand taxation system, with special investment incentives and lower tax rates.
- Strengthen and clarify regulations in order to further reduce tax evasion and avoidance.
- Extend to 2035 the tax exemptions for hiring labor and investing in the most remote areas.
- Incentivize home-buying by the middle class by extending the tax exemption that currently exists for homes valued at UF 2000 to UF 4000.
- Create the "Taxpayer’s Ombudsman" to prevent arbitrary or abusive treatment by tax authorities, and give taxpayers greater legal security.
- Encourage companies to donate to nonprofit institutions basic essentials, which some businesses currently destroy. Such items can include food products, diapers, personal hygiene articles, books, school supplies, and clothing, among others. Companies can then deduct these donations as expenses from their taxable income.
- Make electronic receipts mandatory, in a similar manner to electronic invoices, and separate the net price for the product from the corresponding VAT (IVA).
- Modernize and simplify international taxation regulations, in order to attract greater investment to Chile and to encourage the Chilean economy to integrate into the world.
- Equalize the tax burden between those companies that sell goods and services in a conventional manner and those that do so digitally.
- Modernize and streamline green taxes on polluting activities.
- Ensure that the State’s tax revenues are collected, so that the State can carry out its important functions adequately, especially regarding the development of social policies and infrastructure.