Chile Approves Tax Reform

May 16, 2014 Taxation in Chile

tax reform in chileSANTIAGO – Chile is stepping closer to implementing an extensive tax reform to help raise funds needed to improve the national education system.

In a vote held on May 14th the lower house of Congress has given its approval to a proposal to extensively overhaul the national tax system, ultimately aimed at raising more tax revenues to fund new social programs and welfare measures.

The reform of the tax system is aimed at helping the government raise tax revenues by approximately USD 8.2 billion, with a significant portion of the new funds already earmarked to fund a complete overhaul of the national education system.

As part of the overhaul, the lower house approved an increase to the rate of corporate income tax rate from 20 percent to 25 percent by the end of 2017, along with the closing of several loopholes which had previously allowed businesses shelter portions of their profits from taxation.

Wealthy individuals will also feel a higher tax burden, with the top 10 percent of earners seeing their tax obligations rising from 10.2 percent to 23.8 percent.

Among other smaller measures to help boost revenues, the lower house also approved a hike to the taxes on alcohol and tobacco, along with a handful of legislative changes aimed at eliminating the occurrence of tax evasion.

Photo by: javier