On October 8, 2021, the Regulatory Sub-Directorate of the Tax Technique Department published Circular No. 55, approving the instruction on contributions for regional development. Let’s see:
1. Taxable event
Taxpayers subject to the first category tax of the Income Tax Law based on effective income determined according to full accounting must pay, only once, a contribution for regional development levied on “investment projects” that are executed in Chile and meet the following copulative requirements:
- Involve the acquisition, construction, or importation of tangible goods of fixed assets for a total value equal to or greater than ten million United States dollars.
- Be subject to the environmental impact assessment system under Article 10 of Law No. 19,300 on the general basis of the environment and its regulations.
2. What does the investment project comprise?
An investment project comprises a set of structures and facilities where the tangible goods of the fixed assets are located, constituting a commercially and geographically coherent unit, according to the nature of the project.
The investment project may involve structures and facilities that, although not located adjacent to each other or in the same geographical point, are linked to each other in such a way considered that the group of structures or facilities corresponds to “one” project.
3. Investment proyects exempted from tax
According to the Law, investment projects destined exclusively to the development of health, educational, scientific, research, or technological development activities and the construction of housing and offices are exempt. The taxpayer must request the Ministry of Finance for the granting of this exemption.
4. Rate and taxable base
The contribution has a rate of 1% applied on the acquisition value of all the tangible goods of the fixed assets comprising the same investment project, but only on the portion exceeding the amount of ten million dollars. In the case of goods acquired abroad, the CIF value will be considered according to invoice or contract, import duties, and customs clearance expenses.
In the case of investment projects in which, under any contractual form, different taxpayers participate to determine the total value of the project and calculate the taxable base, the acquisition value of all the tangible goods of the fixed assets comprised in the same investment project must be added together.
5. Accrual of the contribution
The contribution is accrued at the end of the first fiscal year in which the project generates operating income without considering depreciation, provided that the definitive reception of works has been obtained from the respective Municipal Works Directorate.
6. Contribution and payment
The contribution is declared and paid in April of the fiscal year following the accrual of the contribution along with the annual income tax return at the General Treasury of the Republic, the bank offices authorized by the Treasury Service, or by any electronic means.
According to the first paragraph of the thirty-eighth transitory Article, this contribution will apply only to new investment projects whose environmental impact assessment process begins as of the date of publication of the Law in the Official Gazette, i. e., as of February 24, 2020.