From Chile: New OECD International Standards to Combat Tax Evasion
Juan Landa, Domingo Quéro or Christian Silva - Andersen Tax – Landa, Chile, a member firm of Andersen Global
On July 5, 2017, Decree no. 418 was published in the Official Journal of Chile. This Decree allows the Chilean Tax Authority to receive information from more than 100 jurisdictions, including tax havens, about individuals and companies considered residents for Chilean tax purposes with investments abroad. It also covers the Common Reporting Standard (CRS) and the new international standards designed by OECD to combat evasion and tax erosion.
In general terms, CRS is an information exchange process involving financial institutions and Tax Authorities aimed to automatically receive financial accounts from taxpayers of corresponding countries. The implementation of the CRS standard complements the measures to combat international evasion adopted in the Tax Reform (rules regarding the control of companies abroad).
With this measure, Internal Revenue Service of Chile will receive information from more than 100 jurisdictions (including a large part of the tax havens) that will report on individuals and companies considered residents for Chilean tax purposes with investments abroad, to carry out the processes of control for proper payment of taxes.
In terms of the obligations to identify accounts, financial institutions are required to run a due diligence process and identify those accounts held in Chile by third country residents. The information collected must be subsequently informed to the Tax Authority and sent to the other participating jurisdictions. The process of information exchange between financial institutions and Tax Authorities will start in 2018.