Harmful Tax Practices – 2017 Peer Review Reports on the Exchange of Information on Tax Rulings

Chile

Chile has met all aspects of the terms of reference (ToR) for the calendar year 2017 (year in review) that can be met in the absence of rulings being issued.

Chile can legally issue two types of rulings within the scope of the transparency framework.

In practice, Chile issued no rulings within the scope of the transparency framework.

As there were no rulings issued, no exchange of information was required. Therefore no peer input was received in respect of exchanges of information on rulings received from Chile.

Introduction

210.  This peer review covers Chile’s implementation of the BEPS Action 5 transparency framework for the year 2017. The report has four parts, each relating to a key part of the ToR. Each part is discussed in turn. A summary of recommendations is included at the end of this report.

A. The information gathering process

211.  Chile can legally issue the two following types of rulings within the scope of the transparency framework: (i) cross-border unilateral advance pricing arrangements (APAs) and any other cross-border unilateral tax rulings (such as an advance tax ruling) covering transfer pricing or the application of transfer pricing principles; and (ii) related party conduit rulings. In Chile, a specific unit within SII, the National Directorate, considers all ruling requests. A few requests for unilateral APAs have been received from taxpayers and those requests are still under consideration by the Servicio de Impuestos Internos (“SII”).

Past rulings (ToR I.4.1.1, I.4.1.2, I.4.2.1, I.4.2.2)

212.  For Chile, past rulings are any tax rulings within scope that are issued either: (i) on or after 1 January 2014 but before 1 April 2016; or (ii) on or after 1 January 2010 but before 1 January 2014, provided they were still in effect as at 1 January 2014.

213.  In the prior year peer review report, it was determined that SII’s undertakings to identify past rulings and all potential exchange jurisdictions were sufficient to meet the minimum standard if any rulings were such to be issued. SII’s implementation in this regard remains unchanged, and therefore continues to meet the minimum standard.

Future rulings (ToR I.4.1.1, I.4.1.2, I.4.2.1)

214.  For Chile, future rulings are any tax rulings within scope that are issued on or after 1 April 2016.

215.  In the prior year peer review report, it was determined that SII’s implementation of a new system to identify future rulings and all potential exchange jurisdictions, if any such rulings are issued was sufficient to meet the minimum standard. SII’s implementation in this regard remains unchanged, and therefore continues to meet the minimum standard.

Review and supervision mechanism (ToR I.4.3)

216.  In the prior year peer review report, it was determined that SII’s review and supervision mechanisms currently in place and the procedure to be implemented once a larger number of rulings are issued were sufficient to meet the minimum standard. SII’s implementation in this regard remains unchanged, and therefore continues to meet the minimum standard.

Conclusion on section A

217.  Chile has met all of the ToR for the information gathering process and no recommendations are made.

B. The exchange of information

Legal basis for spontaneous exchange of information (ToR II.5.1, II.5.2)

218.  Chile has the necessary domestic legal basis to exchange information spontaneously. Chile notes that there are no legal or practical impediments that prevent the spontaneous exchange of information on rulings as contemplated in the Action 5 minimum standard.

219.  Chile is a party to international agreements permitting spontaneous exchange of information, including (i) the Multilateral Convention on Mutual Administrative Assistance in Tax Matters: Amended by the 2010 Protocol (OECD/Council of Europe, 2011) (“the Convention”) and (ii) Double Tax Agreements with 32 jurisdictions.1

Completion and exchange of templates (ToR II.5.3, II.5.4, II.5.5, II.5.6, II.5.7)

220.  In the prior year peer review report, it was determined that SII’s completion and exchange of templates procedure to be applicable once rulings are actually issued was sufficient to meet the minimum standard. SII’s implementation in this regard remains unchanged, and therefore continues to meet the minimum standard.

221.  Even though it is not currently issuing rulings in practice, SII affirms that when rulings are issued, the required information will be shared in a template based on Annex C of the Action 5 Report (OECD, 2015). SII also commits to complete the summary section in Annex C with the prescribed instructions to the section. Where relevant, Chile will also apply the internal FHTP suggested guidance.

222.  As no rulings within the scope of the transparency framework have been issued in practice, Chile was not required to complete any exchanges of information and there is no data to report on the timeliness of exchanges.

Conclusion on section B

223.  Chile has the necessary legal framework and administrative process in place for exchanging information on rulings. Chile has met all of the ToR for the exchange of information process that can be met in the absence of rulings being issued and exchanged in practice and no recommendations are made.

C. Statistics (ToR IV)

224.  As there were no rulings required to be exchanged by Chile for the year in review, no statistics can be reported.

D. Matters related to intellectual property regimes (ToR I.4.1.3)

225.  Chile does not offer an intellectual property regime for which transparency requirements under the Action 5 Report (OECD, 2015) were imposed.

Summary of recommendations on implementation of the transparency framework

 

Aspect of implementation of the transparency framework that should be improved	Recommendation for improvement
	No recommendations are made.

References

OECD (2017), BEPS Action 5 on Harmful Tax Practices – Terms of Reference and Methodology for the Conduct of the Peer Reviews of the Action 5 Transparency Framework, OECD/G20 Base Erosion and Profit Shifting Project, OECD, Paris. www.oecd.org/tax/beps/beps-action-5-harmful-tax-practices-peer-review-transparencyframework.pdf.

OECD (2015), Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance, Action 5 - 2015 Final Report, OECD/G20 Base Erosion and Profit Shifting Project, OECD Publishing, Paris. https://doi.org/10.1787/9789264241190-en.

OECD/Council of Europe (2011), The Multilateral Convention on Mutual Administrative Assistance in Tax Matters: Amended by the 2010 Protocol, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264115606-en.

Note

← 1.  Parties to the Convention are available here: www.oecd.org/tax/exchange-of-tax-information/convention-on-mutual-administrative-assistance-in-tax-matters.htm. Chile also has bilateral agreements in force with Argentina, Australia, Austria, Belgium, Brazil, Canada, China (People’s Republic of), Colombia, Croatia, Czech Republic, Denmark, Ecuador, France, Ireland, Italy, Japan, Korea, Malaysia, Mexico, Norway, New Zealand, Paraguay, Peru, Poland, Portugal, Russia, Spain, South Africa, Sweden, Switzerland, Thailand and United Kingdom.