By Centro de Conocimiento Tributario (Tax Knowledge Center) - CCT

This year, those who were born in 1984 celebrate four decades... just as in January, Law No. 18,293, which was enacted by Law No. 18.293which -in the mid-1980s- marked a milestone in tax matters by integrating the corporate tax paid by companies or partnerships with the personal taxes the corporate tax paid by companies or partnerships, with the personal taxes that affect the owners, partners or shareholders at the time of receiving such income. The purpose of this was to generate a multiplier effect in the economy, encouraging the reinvestment of profits. reinvestment of profits in the companies.

In this article we will tell you about the main aspects of the two stages of income tax (corporate and owner's) and of the integration integration -total or partial- that currently exists between them. This issue has been the subject of changes and discussion over time and has been on the table again with the projects of tax reform the current government.

Taxation in two levels

As already mentioned, one of the characteristic features of the Chilean tax system is the application of income tax on corporate profits in two stages, as follows two stages and eventually different moments:

• First category tax (IDPC), which is levied on capital income at a fixed rate that has varied over time and depends on the tax regime to which the taxpayer is subject.
• Global Complementary Tax (IGC) or additional (IA), depending on the domicile or residence, which are accrued at the time the owners receive such profits by way of withdrawal, remittance or distribution.

In this scenario, the tax paid annually by the company (IDPC) operates as a credit to the company. credit against the final taxes (IGC or IA) of the owners, partners or shareholders. Credit that the latter can deduct from their personal taxes partially (65%) in the general regime, totally (100%) in the general Pro-PYME regime, or request its refund. refund if applicable.

Options for completing the tax cycle

In line with the changes in tax regimes over the last decade, the following changes have taken place -which have maintained, with nuances, the described principle of integration-companies have controlled their profits pending final taxation their profits pending final taxation in different in different extra-accounting records.

And due to the accumulation of these amounts, the legislator has opened up optional and transitory windows for them to complete the tax cycle, achieving -at the same time- higher tax collection.

The first of these was established by the 2014 Tax Reform, which allowed taxpayers to pay taxes in advance on the balances accumulated in the FUT, an option that was reinstated by the Tax Modernization in 2020.

And the most recent, provided for this 2024 by Law No. 21.681, which allows IDPC taxpayers to pay a single flat rate tax on the amounts that they have accumulated as of December 31, 2023, controlled in the registry of Income or amounts subject to the global complementary or additional tax (RAI)*. (RAI)*. We have already told you about this subject in a previous note, which you can review here.