Chile to tighten tax rules for foreign companies

SANTIAGO, Mar 12: Chile will tighten tax rules for foreign companies and raise levies on larger firms as part of wide-reaching tax reforms likely to be unveiled in April, President Sebastian Pinera said.

Pinera yesterday told tv channel Chilevision the tax reform was aimed in part at raising the tax take to help fund education reforms that the unpopular government pledged in the face of massive protests last year to demand more social benefits and spending.

The government will also lower taxes for individuals and small- and mid-sized companies, he said.

Pinera said the government would probably tax large companies at a rate of 20 per cent, effectively making permanent a temporary increase implemented in the wake of a massive earthquake in early 2010 that has already been partially rolled back and which was due to revert to an original 17 per cent next year.

‘Not only will taxes on large companies increase, we will also correct and eliminate a series of mechanisms of eluding or evading taxes,’ Pinera said.

‘We will correct a series of mechanisms through which foreign companies are not paying as much tax as they ought to, which is do with prices of transfers, double taxation agreements,’ he added.

Pinera has previously said large companies have to make a greater contribution to a more equitable tax system that will seek to foster growth of small and medium-sized companies.

Pinera hiked royalties on mining companies in 2010 and raised a host of taxes to help finance reconstruction after the devastating earthquake.

(agencies)

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