The Chilean tax authority (Servicio de Impuestos Internos - SII) issued a release on 21 July 2020 regarding the deadline for taxpayers to change the applicable tax regime as per changes made by Law No. 21.210 on the modernization of tax legislation, which was published in the Official Gazette on 24 February 2020 and generally applies from 1 January 2020. With Law No. 21.210, the prior dual corporate tax system was replaced with a single tax regime (partially-integrated regime) with a tax rate of 27%, and a separate regime, the "Pro Pyme" regime was introduced for SMEs with average annual revenue of up to 75,000 UF in the previous three years.
As explained in the release, the Pro Pyme regime actually consists of two regimes, allowing SMEs to choose a regime of taxation for owners based on withdrawals or distributions, with a reduced tax rate of 25% (standard Pro Pyme regime) or a tax transparency regime, in which the company does not pay income tax and the owner is subject personal income tax on the income of the company (transparent Pro Pyme regime).
The standard deadline for qualifying taxpayers to change the applicable regime is between 1 January and 30 April each year, but for 2020 this was initially extended to 31 July 2020 in light of COVID-19. The deadline has now been further extended to 30 September 2020.
Note - Unidad de Fomento (UF) is an indexed unit equal to CLP 28,668.36 (~USD 37.65) as on 30 July 2020.
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