On December 19th, 2023, the long-awaited Treaty to Avoid Double Taxation between Chile and the United States came into force. Aside from the tax regulations themselves, it is possible to find in its articles a provision that has received little attention: article 27, referring to the exchange of information.
In simple words, the tax administrations of both States, in this case, the Internal Revenue Service (“SII” for its initials in Spanish) and the Internal Revenue Service (“IRS”), are enabled to share data on all types of applicable taxes, as well as on liquidations, collection, non-compliance and administrative or judicial remedies exercised against them. It should be noted that the rule is not limited by the taxes included in the treaty, but its scope extends to all types of taxes, and may therefore include Value Added Tax and donations, among others.
Then, after pointing out certain limitations related to not adopting measures contrary to the internal law of each state or the secrecy of business records, the rule is clear in indicating that it will not be an excuse for the delivery of information if it is in the possession of other entities. such as banks or other financial institutions, or there are references to participations of a person in the ownership of a company.
The regulation is of capital importance, since one of the main investment destinations for Chileans is the North American country, giving the supervisory body a valuable tool to request information from the taxpayer, their financial assets, passive income, shares and social rights of companies. foreign assets, their profits and in general all types of tangible and intangible assets that generate income. Furthermore, it is interesting that, unlike other matters, the application of the exchange rule came into force immediately, contemporaneously with the Convention, and can operate with respect to tax periods prior to its entry into force.
