On September 6th, 2023, the Chilean Internal Revenue Service (“SII” for its initials in Spanish) published Circular 38, which complements and clarifies aspects of Circular 57 of December 26th, 2022. The latter provides instructions on the tax established in article 9 ° of Law No. 21,420 of 2022, a new tax for luxury vehicles, with a rate of 2% annual as a tax benefit on the current market price, the first payment of which had to be drawn and paid in April 2023.
The assets that may be taxed correspond to:
1. Helicopters, manned, weighing over 160 kilos, with a current market price equal to or greater than 122 UTA,
2. Manned aircraft, weighing over 160 kilos, whose current market price is equal to or greater than 122 UTA,
3. Yachts, whose current market price is equal to or greater than 122 UTA except for those whose main means of propulsion is sailing and are used by athletes in their sporting activities and
4. Cars, trucks and similar vehicles, whose current market price is equal to or greater than 62 UTA.
Furthermore, it indicates that in the case of taxpayers who declare the first category tax on effective income, they will not be able to deduct this tax in the determination of their net income or tax base. However, said item will not be affected by the taxation provided by article 21 of the Income Tax Law (“LIR” for its initials in Spanish).
Property owned by the Treasury or municipalities will not be affected by this tax. Nor will the assets owned by a company that develops activities of numbers 1, 3, 4 and 5 of article 20 of the Income Tax Law be affected, provided that the respective assets are effectively destined and are essential for the development of these activities.
Circular 57 of 2022 – in relation to the assets owned by a company that carries out activities of numbers 1, 3, 4 and 5 of article 20 of the Income Tax Law – interpreted that they were only those that form part of the “fixed assets”.
Circular 38 of September 2023 expanded the concept of assets intended for and indispensable for the development of its activities and included “realizable assets”, replacing the respective paragraph with the following:
“i. That the assets are effectively destined for the development of said activities, which in the case of companies that keep accounting, means that they form part of the fixed or realizable assets of the latter.”
This clarification is consistent with what the law intends to impose, which is a tax on the possession of a limited amount of goods with high value (luxury), therefore, it should not apply to goods owned by a company and that will be used for the development of its activities, both fixed assets and inventories for sale.
