Income Tax and Its New Taxation Systems: Evolutionary, Regulatory, and Practical Analysis (2014)

Author: Christian Aste Mejías

Following the Tax Reform introduced by President Bachelet’s administration, Chile’s tax system underwent a fundamental transformation. Unlike the previous system, which encouraged savings by deferring the final tax—either the Global Complementary Tax or the Additional Tax—until profits were distributed or withdrawn, rather than when they remained within the company or were reinvested, the new system favors expenditure. Under the attributed income regime, the final tax is payable regardless of whether the profits are actually withdrawn.

The alternative is to pay the final tax only when profits are withdrawn or remitted abroad. However, under this option the tax system is no longer fully integrated, as taxpayers are entitled to claim only 65% of the available tax credit instead of the full 100%.

This book examines these changes in conjunction with the tax rules that remained unchanged, particularly those governing the determination of a company’s taxable income. The analysis follows a highly pedagogical approach: rather than merely describing the key aspects of the Tax Reform, the author also examines the determination of taxable income in light of the prevailing administrative criteria and judicial precedents.

After establishing this framework, the book reviews the legislative history of the Reform and explains how these two tax systems are regulated under Chilean law. The discussion is reinforced with practical exercises, making the operation of the new system easier to understand not only for professionals working in the field—lawyers, auditors, accountants, and engineers—but also for students, business owners, and anyone seeking to gain a deeper understanding of Chile’s tax framework.

Available in the BCN Catalog, Library of the National Congress of Chile