On October 24th, Law 21,713 was published in the Official Gazette, which pertains to the so-called “Tax Compliance Project.” This law introduces amendments to the Value Added Tax Law, the Income Tax Law, and the Tax Code.
While changes to the General Anti-Avoidance Rule (GAAR) and the Valuation Authority have garnered the most attention, other modifications, aimed at strengthening tax administration, should not be overlooked.
Among the main innovations in tax oversight are: (i) changes to the Statute of Limitations for the Tax Authority’s Actions; and the strengthening of its audit capabilities through the creation of (ii) Unified Audit Tools for Business Groups and (iii) Multi-jurisdictional authority.
Regarding the first point, prior to this project, the statute of limitations for the Internal Revenue Service (SII, for its initials in Spanish) to cite, assess, or issue charges to a taxpayer began when the auditor certified that all necessary documentation was available, with a 10-day period to issue this certificate. In practice, however, this certificate was sometimes not issued promptly, delaying the start of the statute of limitations.
The new law modifies this process by establishing that if 10 days elapse after receiving the documentation without a certificate being issued, the documentation is automatically considered complete, and the statute of limitations specified in Article 59 of the Tax Code begins. This change favors taxpayers by enhancing legal certainty regarding audit deadlines.
Additionally, from November 1st, 2024, the SII will be allowed to audit operations or transactions conducted in Chile by taxpayers of the same Business Group who are currently or will soon be audited. The tax authority can determine that the audit falls under the jurisdiction of the unit overseeing the Group’s parent company or the Large Taxpayers Directorate, as applicable. Although the Law provides limited regulation of the procedure, a forthcoming SII Resolution will outline the criteria and terms under which this new authority will be exercised.
The third tool will allow a Regional Directorate to audit taxpayers domiciled in any jurisdiction in the country, and this can be done remotely with authorization from the Director or Deputy Director. This modification will be implemented gradually, starting with the Metropolitan, Valparaíso, and BioBío regions in January 2025, and extending to the rest of the country in 2026.
It is worth noting that exercising this new authority could present future challenges, such as reconciling its application with the SII’s decentralized and functionally distributed structure, understanding the economic contexts of different regions or reconciling it with the right to defense, as it may require specialized legal support.
Regarding Judicial Procedures, a notable change is the elimination of the Real Estate Valuation Claim, which is now regulated by the General Claim Procedure under Article 124. The new statute maintains the deadlines, grounds for claims related to general and individual valuations, and associated assessments without changing the applicable requirements. Specific grounds previously applicable only in special procedures are now incorporated into the general procedure.
As a result, the general appeals regime now applies to rulings of the Tax and Customs Court, eliminating Special Appellate Courts. However, claims initiated before the Law comes into effect will not be affected, as they will continue under the rules in force at the time of filing.
The law also encourages the use of settlement methods. (i) In the General Procedure, the restriction is removed that only matters raised in the claim or could be raised by the TTA may be settled; (ii) The prohibition of conciliation in procedures such as GAAR and Penalty Application is eliminated, expressly allowing it; (iii) The resolution of the proposed extrajudicial settlement is delegated to a new collegial body, the “Executive Committee,” composed of the SII Director (Chair) and the Heads of Normative, Audit, and Legal Departments.
Measures regarding precautionary actions are reinforced, allowing to be applied pre-emptively to prevent taxpayers from transferring or selling assets during proceedings.
Concerning the Executive Collection of Tax Obligations, the new Law establishes an electronic processing system for TGR collection files, with digitalization, conservation, and reproduction requirements for documents. This is beneficial, as there is currently no suitable platform for remote submissions and viewing the status of executive processes in the Treasury, which is burdensome given the short opposition deadlines and the significant financial effects on delinquent taxpayers.
Additionally, Treasury’s enforcement powers are broadened, allowing collections not only from salaries or wages but also from any credits or financial entitlements taxpayers have.
Also, measures such as coercive orders, execution and attachment orders, payment demands, and notifications to services like the Civil Registry and Real Estate Registrar for attachment purposes can now be delivered via email.
Finally, a new Article 197 bis allows taxpayers whose debts are time-barred to request an administrative declaration of the statute of limitations from the Treasury if neither administrative nor judicial collection has commenced. This will be carried out through a procedure to be outlined by instruction.
In summary, the new legislation brings significant advances in tax auditing and judicial procedures, though it also presents challenges that may impact taxpayer rights. Observing the development of administrative guidelines governing these changes and their practical implementation will be essential. Only then can we assess whether the reform achieves its goals and effectively benefits our tax system.
