Gabriel Boric’s Presidential Program: Hints for the 2022 Tax Reform

by | Dec 20, 2021

On Sunday, December 19th 2021, Gabriel Boric was elected President of Chile for the period 2022-2026. Although there are various definitions that will be known as the days go by, the processing of a tax reform and the measures for economic reactivation are some of the pillars that take center stage.

As long as there are no new official statements on the guidelines for the 2022 Tax Reform and economic management, we summarize below the proposals of the program presented for the second round, which indicate a proposed path to follow.

SME’s:

  • Simplification of the regulatory burden so that procedures are easy and expeditious, going forward in standardization and digitalization of the procedures and permits.
  • Expansion of access and improvements of conditions to the segments excluded from the banking system, improving the guaranteed credit system (FOGAPE, FOGAIN, and others) and strengthening of the credit programs for Mipyme of Banco Estado and those of direct financing from CORFO, SERCOTEC, FOSIS and other institutions.
  • Implementation of the national plan fordigital transformation and coordinated work with the network of state technical training centers to generate cooperation, training and training for MSMEs and cooperatives in their management, administration and productive processes.
  • Promotions of the developments of innovative ecosystems to foster and accompany the creation of newscientific-technological-based ventures (start-up), their growth, developments and scaling (scale-ups).
  • Improvement of the participation of MSMEs and cooperatives in public purchases through positive discrimination mechanism for MSMEs in all contracting and purchasing mechanism.
  • Strengthening of local and regional spaces to support SMEs, working together with regional governments and municipalities, advancing in the development of institutional capacities and in articulated and coordinated promotion policies at each level.

Taxes:

  • New income tax regime for large companies
  • Regarding income tax, the following are proposed: i) advance in the disintegration of the tax system ii) design instruments that mitigate the problem of indefinite postponement of the payment of personal taxes and capital income iii) review the taxation of capital income in its different forms.
  • Eliminate exemptions that generate unjustified tax expenditure, through legal reforms and administrative measures that reduce evasion and avoidance.
  • Implementing a tax on the high networth that has the challenge of strengthening the Chilean IRS’s inspections tools.
  • The establishment of green taxes to internalize costs and discourage pollution.
  • Study a new way of composing the taxable base of the royalty to large mining.
  • Establish a mechanism to ensure that large companies are obligated to pay effective VAT on invoices issued by MSMEs and that SMEs are not obligated to pay VAT without having the cash to do so.
  • Promote the transparent regime so that more MSEMs are part of it and are not harmed by the semi-integrated tax system.

Economic measures and legal modifications with tax effects:

  • Perfect the 30-day payment law and implement a payment management program so that the entire public sector complies with the law, without exceptions.

Public and private investment with emphasis on ecology and sustainability:

  • Housing Emergency Plan and the construction of households from the public sector, generating employment and increasing the surface of new and existing social interest housing, integrating criteria of sustainable production and energy efficiency.
  • Substantial investment in rural drinking water to ensure the human right to water and sanitation; also in natural infrastructure that allows us to recover our waters and ecosystems; as well as in irrigation works for small and medium agriculture.
  • Investment in green infrastructure works, with effects on adaptation and / or mitigation of climate change: infrastructure for urban mobility with low environmental impact, improvement of the coastline through works that protect the coast of the localities against storm surges, waterspouts and the increase sea level, as well as works that increase the quality of life of the communities: improvement of accesses and pedestrian walkways, lighting, etc.
  • Increase investment in thermal reconditioning and replacement of heaters, contribute to the installation of electricity generation systems and renewable energy at the residential level, which will create jobs and, at the same time, reduce household electricity bills.
  • Establish a water efficiency program for domestic hot water.
  • As a form of support for tourism throughout the country and with sustainability objectives, we will invest in infrastructure and we will promote energy efficiency and renewable energy projects for MSMEs in the sector, among others.
  • Investment in adapting the cultural infrastructure that allows optimal ventilation and distance conditions to ensure its operation, and in programs that promote outdoor activities, concerts, performing arts cycles and festivals, among others.

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