The Internal Revenue Service restructures the Directorate of Large Taxpayers and Establishes a new List of Large Taxpayers
Santiago, July 11, 2023
1. Background
In accordance with the provisions of article 3 bis and 9th final paragraph of the Organic Law of the Internal Revenue Service, the Large Taxpayers Directorate will have jurisdiction over the entire national territory and will exercise jurisdiction over taxpayers classified as “Large Taxpayers”. by Resolution of the Director.
Likewise, through SII Exempt Resolution No. 95 of 2010, the organization of the Large Taxpayers Department was established, establishing the units that make it up and their respective functions.
On the other hand, by means of SII Exempt Resolution No. 142, published on December 30, 2021, the last list of taxpayers that were classified as “Large Taxpayers” was established, and over which the Large Taxpayers Directorate exercises jurisdiction, whatever it may be. his address, which was contained in “Annex A” of the aforementioned resolution, and which formed an integral part of the administrative act.
2. Restructuring of the Directorate of Large Taxpayers
With the objective of modifying the structure of the Department of Large Taxpayers in order to adapt to the Integrated Tax Compliance Management Model and, in general, to the new policies of the SII, regarding the strategies to address the assurance of tax compliance of the Groups Business, with a focus on Tax Social Responsibility, on June 28, 2023, Exempt Resolution No. 74 was published where the new structure of the Large Taxpayers Department was established, made up as follows:
- Department of Compliance of Large Business Groups No. 1;
- Large Business Groups Compliance Department No. 2;
- Compliance Department of Large Business Groups No. 3;
- Legal Department;
- Tax Administrative Procedures Department;
- Administration Department;
- Facilitation and Assistance Office and,
- Management Support Office.
According to the Director of SII, Hernán Frigolett, “the objective of this work is to face the challenges implied by the control strategy that the SII is implementing with the Large Business Groups that generate the highest percentage of collection in the country.”1
The general functions of each department and offices, for the correct implementation of this new model, are detailed in this Annex.
3. New List of “Large Taxpayers”
On June 28, 2023, the SII Exempt Resolution No. 75 was published by the Internal Revenue Service (SII) with the aim of improving the management of tax compliance, and in response to the dynamism with which events occur in economic life. , updated the taxpayers that are incorporated or excluded in the “Large Taxpayers List”.
Said act has the scope of monitoring and providing services, oriented to the correct application of internal taxes in an efficient, equitable and transparent manner, in order to ensure tax compliance, mitigate the risks of non-compliance through a comprehensive and consolidated model to the business groups or associated entities.
Therefore, the criteria to be considered as “Large Taxpayers” are established, such as:
a) Belong to a business group2 in which the sum of the annual income or sales of the last three business years of the companies resident in Chile of the group, without adjusting operations between related parties, are equal to or greater than 75,000,000 units of promotion (UF);
b) Belong to a multinational business group3 whose parent or controlling entity has residence for tax purposes in Chile and has been obliged to present the sworn statement, “Country by Country Report” in Chile, in at least one of the last three business years;
It should be noted that the Director of Large Taxpayers may also qualify under this definition those who do not meet the aforementioned criteria or in turn exclude certain taxpayers who meet the aforementioned criteria.
Also, the following should be taken into account:
- In the case of income to the “Large Taxpayers Payroll”, in general, the minimum permanence will be three years counted from the effective date of the Resolution that has granted them the qualification of Large Taxpayers.
- If they want to be included or excluded from this definition, they must submit a well-founded request to the Department of Large Taxpayers of the Service.
4. Effects of this new resolution
The objective of the SII is to ensure high levels of coverage and direct and indirect collection in order to reduce tax evasion and avoidance, through the restructuring of the area of large taxpayers; concentrating taxpayers that belong to business groups; including taxpayers with international transactions and subsidiaries abroad.
This will cause greater auditing in the field of Transfer Pricing, not only individually but through possible audits shared with other Tax Administrations, given that now the review will also focus on business groups, since there are still companies that do not present their affidavits or having presented it, does not maintain the correct documentation for its support such as the Transfer Pricing Study. This is the case of taxpayers obliged to submit Form 1907, who, having submitted it, do not document it correctly, since it does not require the attachment of a Transfer Pricing study as in the case of the annual Affidavit on Local File (Form 1951 ).
It is our recommendation that the person assigned by the Company responsible for these issues contact their Transfer Pricing advisors, so that they can review the specific impact of what is mentioned in this alert.
As always, we are at your disposal to answer any questions you may have.
Atentamente,
TP Consulting Chile
1 Internal Revenue Service (June 30, 2023). SII restructures the Directorate of Large Taxpayers as part of its strategy to audit the tax compliance of Large Business Groups. https://www.sii.cl/noticias/2023/300623noti01rp.htm
2The definition of Business Group is included in Annex 3 of Exempt Resolution SII No. 75.
3The definition of a multinational business group is found in Annex 3 of Exempt Resolution SII No. 75.
