Anti-circumvention rules: Order and Legal Certainty in Chile

One of the measures included in the tax reform approved in 2014, the anti-circumvention rules, commencing upon today. This expands the powers of the Internal Revenue Service (IRS) to monitor and punish abuses and simulations of taxpayers who seek to avoid paying taxes. In addition, it extends the responsibility of the taxpayer to his advisers who participated in evasive maneuvers.

The same law stipulates that the rules apply only to events or business conducted or concluded after its entry into force. This last part of the text leaves open, according to expert, the possibility that apply to events prior to this date.

Last August 10, the Treasury reported that the "simplification "which will make the tax reform would require that the anti-circumvention rule does not apply to previous facts.

''Any operation to obtain a tax advantage might be regarded as abuse or simulation."

Until the tax reform, our legislation did not provide a definition for circumvention, implying a framework of uncertainty for taxpayers. Even the Supreme Court has ruled in various acts criteria that can be described as elusive.

The anti-circumvention rule represents a significant change to our tax system for several reasons. It recognizes that avoidance is a problem and therefore, no longer acceptable. It is legitimate to put us in a "advantageous" position in relation to the tax law through forms or structures-not being illegal in themselves-without leaving the application taxable event established by law.

In addition, the standard is designed on objective parameters. The Tax Court judge and elusive Customs should qualify as an act only in cases of abuse of legal forms and simulation, must base its decision considering the economic nature of the taxed economic fact-facts that the judgment of the legislature are proof of ability to pay tax -, regardless of the purpose that had the taxpayer.

With this standard criminal penalties for taxpayers is not sought but to ensure compliance with the tax law, giving management a tool that allows you to secure the payment of taxes established by law.

It does not eliminate the legitimate right of taxpayers to associate and organize their businesses freely and can continue to organize its operations with the set of tools that give them the tax law. It expressly recognizes that it is totally unacceptable that a taxpayer for a lower tax burden, tax burden does not generate any tax or get a different effect, in so far as those generated effects resulting from the tax law and not violate.

This rule clearly grants users the tax system on the avoidance and tax administration enable combat on the basis of an objective legal framework.

Claudia Valdes Muñoz

Translated by: Mónica Landaluce.