Recently, the Tax Administrations of Peru and Chile issued declarations regarding the application of the Peru-Chile DTA in the income generated by the indirect disposal of shares among domiciled persons of the Member Countries of the referred Agreement. The conclusions of each administration are presented below:
Peruvian Interpretation
By Report No. 000117-2023, the SUNAT (Superintendencia Nacional de Aduanas y Administración Tributaria – National Superintendence of Customs and Tax Administration) established a new interpretative criterion regarding the application of the Peru-Chile DTA.
According to this Report and Article 21, this income cannot be taxed by Chile and Peru, given that the indirect disposal of shares is not expressly regulated by the Peru-Chile DTA.
It should also be noted that SUNAT concludes that there could not be a joint interpretation along with the DTAs entered into with other countries, given that these were issued in different legislative contexts. Thus, the intention of the Agreement is also different.
Chilean Interpretation
On the other hand, on February 15, 2024, the Chilean SII (Servicio de Impuestos Internos – Internal Revenue Service) published Official Letter No. 373, which interpreted the Peru-Chile DTA regarding the case under consultation.
The analysis of the Chilean Administration is based on comparing and interpreting jointly the Peru-Chile DTA with the Spain-Chile DTA, concluding that:
“(…) according to paragraph 4 of Article 13 of the Agreement, the capital gain obtained by the selling corporation from the direct or indirect disposal of shares or other rights representing the capital in a company incorporated in Peru can be taxed in Chile and Peru under their internal laws without any limitation”
Conclusions
Although both administrations conclude that both countries can tax the income generated by the indirect disposal of shares, there is a difference in the interpretation of the Peru-Chile DTA.
Peru claims the power to tax under Article 21 of the Peru-Chile DTA, while Chile recognizes Peruvian taxation under Article 13(4) of the Agreement.
Source: SUNAT / SII