ChileTax and financial measures associated with COVID-19
Tax measures and accounting implications
2 September 2020, Law No. 21,256 was published, which establishes tax measures that are part of the emergency plan for economic and employment reactivation within a framework of fiscal convergence in medium term. The purpose of the Law is to inject liquidity and promote economic reactivation through a series of tax measures.
The detail of the tax measures and their validity are:
- Decrease to 10% the First Category Tax rate for Small and Medium Business
- The First Category Tax (IDPC) rate of taxpayers under the Pro- Small and Medium Business Regime for their income for business years 2020, 2021 and 2022 is temporarily reduced from 25% to 10%. In addition, as of November 2020, the PPM rate that they must pay until 2022 is temporarily reduced by half.
- Expansion of benefit depreciation and instant amortization.
- In order to promote investment by companies - the temporary benefit of the instantaneous and comprehensive depreciation regime of 100% of the physical assets of the fixed asset is expanded for investments made throughout the country - and incorporating an instantaneous amortization regime for certain intangible assets.
A) The physical assets of the fixed asset
Depreciation regime of the twenty-first transitory article of Law No. 21,210.
Corresponds to an instant and immediate installment in the year in which the use of the asset begins, equivalent to 50% of the acquisition value of new or imported goods between 1 October 2019 and 31 December 2021, it is modified this last date to 31 May 2020. That is, this transitory depreciation regime that was in force for assets acquired between 1 October 2019 and 31 May 2020 and their respective depreciations, are reduced as an expense, to be counted from tax year 2020 onwards, depending on the year in which the use of the asset begins.
Depreciation regime of the twenty-second transitory article of Law No. 21,210.
Corresponding to an instantaneous and full quota in the same year in which the goods are acquired, equivalent to 100% of the acquisition value of the new or imported goods to physically install them and use them in the production of goods or provision of services exclusively in the region de la Araucanía between 1 October 2019 and 31 December 2021, this last date is modified to 31 May 2020. That is, this transitory depreciation regime was in force between 1 October 2019 and 31 May 2020.
New depreciation regime for the acquisition of new or imported physical assets of fixed assets of the twenty-second transitory article of Law No. 21,210.
A new depreciation regime is established for the acquisition of new or imported physical assets of fixed assets in the period between 1 June 2020 and 31 December 2022. This transitory rule is applicable to IDPC taxpayers who taxed based on effective income according to complete accounting.
SMEs covered by letter D) of article 14 of the LIR are excluded from this depreciation regime, since the special regime of instantaneous asset depreciation incorporated in Law 21,210 is permanently applied to such companies. as instructed in the circular of the Internal Revenue Service (SII) No. 62 of 2020.
B) The following intangible assets intended for the interest, development or maintenance of the company or business, acquired between 1 June 2020 and 31 December 2022:
- Industrial property rights protected in accordance with Law No. 19,039.
- Intellectual property rights protected in accordance with Law No. 17,336.
- A new plant variety protected in accordance with Law No. 19,342.
Temporary extension of the VAT postponement period from two to three months.
Taxpayers under the provisions of letter D) of article 14 of the LIR or under the general regime of complete or simplified accounting, whose annual average income from their business does not exceed 100,000 development units in the last three calendar years, may postpone the full payment of the VAT accrued in a respective month, up to three months, provided that they comply with the requirements indicated in the aforementioned article 64 of the LIVS. Measures in force until 31 December 2021.
Postponement until January 2021 of the entry into force of the obligation to issue an electronic ticket for those who are already electronic billers and as of 1 March 2021, for those who do not have such quality.
Release payment contribution for regional development.
Taxpayers who meet the following requirements are released from the payment of the contribution for regional development:
- That the investment project be submitted to the environmental impact assessment system until 31 December 2021;
- That the execution of the project or activity begins within a period of 3 years, counted from the notification of the resolution that qualifies it environmentally in a favourable manner.
Possibility of requesting a refund of the remaining VAT tax credit for SMEs.
Article 2 established, for certain taxpayers (Companies that meet the requirements to qualify for the Pro Small and Medium Business Regime contemplated in letter D) of Article 14 of the Income Tax Law, contained in Article 1 of Decree Law 824, of 1974, to which the registration provided for in article 59 of the Law on Sales and Services Tax, contained in Decree Law No. 825, of 1974), the option to request a refund of the accumulated remainder of VAT tax credit determined from the declaration of said tax that is made in the months of July, August or September of the year 2020, which will be paid by the General Treasury of the Republic, up to an amount equivalent to the amount of the remainder determined as established the same Law. In this regard, at the time this Service instructed on this reimbursement mechanism through Resolution Ex. No. 107 of 2020, which established the procedure to request the return of rema VAT entities, in accordance with the provisions of Law No. 21,256.
Employee and employer supportive measures
Decree No. 279 issued by the Ministry of Finance (hereinafter "the Decree") was published in the Official Gazette of 6 March 2021, which extends the validity of the benefits and the benefits indicated and grants the right to additional drafts with charge to the Solidarity Unemployment Fund and extends the validity of Title II of Law No. 21,227, in accordance with the provisions of Article 16 of Law No. 21,263, which temporarily makes access requirements more flexible and increases the amount of benefits of the unemployment insurance under Law No. 19,728, due to the pandemic caused by COVID-19, and perfects the benefits of Law No. 21,227, and Law No. 21,312, which extends the validity of the benefits established in the Laws N ° s. 21,227 and 21,263.
The details of the benefits and their validity are:
- The validity of the benefits and benefits established in Title I of Law No. 21,227 is extended, as of 6 March 2021 and until 6 June 2021.
- It is granted, as of 6 March 2021 and until 6 June 2021, up to a fifteenth drawing charge to the Solidarity Unemployment Fund of law No. 19,728, for beneficiaries who, in said period, have right to benefits associated with the existence and are in the event described in the first paragraph of article 1 of Law No. 21,227 and have exhausted their rights to withdrawals from the aforementioned Solidarity Unemployment Fund, by virtue of Law No. 21,227. As of the sixth draft, 45% of the remuneration is established as the average percentage of remuneration of these transfers, and the higher value of the benefits associated with the aforementioned transfers is set in the sum of $ 419,757 and its lower value in the sum of $ 225,000.
- The validity of the benefits and benefits established in Law No. 21,263, with respect to Law No. 19,728, is extended from 6 March 2021 until 6 June 2021.
The Employment Protection Law seeks to protect the labor source of workers, allowing them to access the benefits and supplements of the Unemployment Insurance, when the following situations arise:
- The employment contract is suspended by act of authority (quarantine).
- An agreement to suspend the employment contract is agreed.
- A work suspension pact is agreed under the protected parenting law
- A temporary reduction in working hours * is agreed upon.
- Suspension of employment contract
The benefit is that workers can access their remuneration through Unemployment Insurance when employers whose activities were affected, in whole or in part, by health restrictions as a result of the COVID-19 pandemic, avail themselves of the suspension by act authority or agreement to suspend the employment contract.
Social security measures
Temporary reduction of working hours
It allows employers to agree with their workers, individually or collectively, the reduction of up to 50% of the duration of their working day. The worker receives an additional supplement to his salary of up to 25% charged to the Unemployment Insurance.
The regulations establish the right to suspension from work for affiliates: parents or those who take personal care of pre-school children whose establishment the minor would attend must be temporarily closed due to the COVID-19 pandemic.
Law that makes insurance more flexible
It temporarily makes the requirements to access Unemployment Insurance (corresponding to Law No. 19,728) more flexible, in order to allow more workers to access this benefit. In addition, it improves the benefits of the Insurance, as well as those of the Employment Protection Law.
Reactive Fogape Law
It aims to help Small and Medium Businesses recover after the economic crisis caused by COVID-19.
This new law expands the benefits and uses of the Guarantee Fund for Small and Medium Entrepreneurs (Fogape), a measure that sought to help SMEs and entrepreneurs to have liquidity through credits with state guarantee.
- The Fogape Reactiva will allow to continue expanding benefits for SMEs during the pandemic, through financial support with a state guarantee.
- This benefit is for companies with annual net sales that do not exceed 1,000,000 UF.
- This law extends the Fogape COVID-19 credit guarantee up to five years.
- The Fogape Reactiva is authorized to be used to pay current Fogape debt.
- Fogape Reactiva's guarantee will have a maximum term of 7 years, extending the program until 2028.
- The Fogape Reactiva can be used until 31 December 2021
- The credit rate is made more flexible, allowing companies in riskier sectors to access loans guaranteed by Fogape.
- This benefit is for companies with annual sales that do not exceed 1,000,000 UF.
- The Fogape guarantee limit is increased in the following cases:
- In economic sectors affected by the current crisis (such as tourism, hotels and gastronomy).
- When credit is used to acquire fixed assets.
- These operations will be exempt from the payment of stamp and stamp taxes, and also, from the commissions for advance payment.