Through this process, companies can identify potential adjustments, estimate taxes, project results, and make strategic decisions to avoid potential contingencies with the Chilean Internal Revenue Service (SII).
As the year-end approaches, and considering the natural delays in financial closings, it is crucial to conduct an analysis. Implementing a preliminary financial closing process, for instance, as of September 30, is a recommended practice for companies. This enables them to evaluate their financial situation at year-end, project preliminary taxable liquid income, and calculate corporate tax and tax obligations for that period.
According to our partner, Hernán Fuentes, “this preliminary financial closing provides a clear view of the financial situation at this advanced intermediate stage of the year. Although it is not the definitive fiscal year-end closing, it highlights possible deviations and prepares financial statements for analysis and decision-making, which is crucial for effective company management.”
Our Unitax leader explains that this process involves a detailed analysis of the income generated and expenses incurred to date, assessing their alignment with annual projections. “It also provides an advanced perspective on the level of compliance with financial objectives (e.g., EBITDA or projected net profits), helps review potential provisions, amortizations, depreciations, and inventory adjustments in line with accounting and tax regulations, and allows for a preliminary estimation of the taxes payable while considering actions to optimize the tax burden,” he states.
Moreover, when estimating taxable liquid income as of September 30, companies must project their results, factoring in not only income and expenses but also tax adjustments in compliance with current regulations. This step includes reviewing aspects such as tax depreciations, disallowed expenses, withdrawals during the fiscal year, and preliminary records such as the tax business income registry and the tax equity.
Hernán Fuentes emphasizes that the preliminary financial closing “enables the identification of areas for improving profitability or highlighting potential tax, operational, or financial risks. It also facilitates informed decision-making regarding investments, cost reductions, and debt restructuring, among other aspects.”
Thus, to make strategic decisions, enhance planning for the remainder of the fiscal year, and avoid contingencies with the Internal Revenue Service when submitting the final tax declaration, it is essential to have a consolidated accounting and tax team updated on current financial and tax regulations.
