Today, Diario Financiero newspaper reports on the ruling by the Tax and Customs Court (TTA, for its initials in Spanish), which dismisses the arguments made by the Chilean Internal Revenue Service (SII, for its initials in Spanish) to classify as tax avoidance the actions taken by a professional medical corporation in the city of Temuco. Beyond the specific case, the ruling is significant because—had the arguments been accepted—it would have validated the application of the General Anti-Avoidance Rule (GAAR) prior to its effective date.

On a related note, our Director of Dispute Resolution, Patricio Casas, commented: “The TTA ruling goes in the right direction by rejecting the avoidance claim, as it helps deter the forced application of the Anti-Avoidance Rules, both from a substantive perspective and in terms of artificially extending the timeline of the facts to which the rules would apply. In this case, the SII’s claim is not only unfounded because the GAAR did not exist when the company was incorporated in 1999, but also because it seeks to ignore both the taxation rules applicable to this type of company and other factors that may have influenced the partners’ decision to form the company, beyond the potential direct income each of them could generate.”

To read the full article, click here.