Obligation to declare investments abroad | By David Ancelovici

Jun 30, 2023

One of the most relevant obligations is the filing of the Foreign Operations declaration, which is due on June 30 of this year.

In the context of the discussion of the bill that systematizes economic crimes, the so-called tax compliance has gained relevance, oriented to the compliance of taxpaying entities with the tax rules and the responsibilities derived from eventual irregularities. In this sense, the proposal contemplates the incorporation to the catalog of crimes of Law N°20.393, which establishes the criminal liability of legal entities, the crimes prescribed and punished by Article 97 of the Tax Code.

Although in the local reality it is not possible to speak properly of tax compliance, companies, in general, have mechanisms to comply with the obligations imposed by law and the Internal Revenue Service, in order to avoid penalties arising from non-compliance with regulations.

One of the obligations that is of great importance is the filing of the Sworn Statement N°1929 on Foreign Operations (DJ No. 1929), whose deadline for filing is June 30 of this year. The following are obliged to comply with this declaration: (i) taxpayers domiciled or resident in Chile who make an investment or carry out operations abroad, or who obtain income from abroad; and (ii) permanent establishments in Chile of foreign entities or non-resident individuals who make an investment or carry out operations abroad, or whose income abroad is attributable to them.

The consequences for non-compliance with this obligation arise from the non-filing, delay or errors in the DJ N°1929, due to the provisions established by the Tax Code regarding infractions and penalties. In the case of delay or omission, the fines for non-compliance may reach 10% of the taxes resulting from the assessment, if the delay is less than 5 months. If this period is exceeded, the fine is increased by 2% for each month or fraction of a month of delay with a maximum limit of 30% of the taxes due.

However, if the infraction is based on a maliciously incomplete or false declaration, the fines may vary from 50% to 300% of the value of the tax evaded, in addition to prison sentences ranging from 541 days to 5 years imprisonment. It is important to take into account that, in the latter case, both the taxpayer and its representatives and managers may be active subjects of the infraction.

Compliance with these obligations, together with the forthcoming incorporation of these offenses into the law on criminal liability of legal persons, poses new challenges in terms of regulatory compliance. This forces companies to adopt new conducts in their business behavior, raising compliance standards, depending on the risks they face.

The fact that Law N°20.393 includes new crimes in its catalog implies an opportunity to strengthen the fight against corruption. In this regard, it is important to be aware of the criteria to be adopted in terms of crime prevention models, as this will help to prevent and reduce the commission of offenses and to promote a culture of ethics and compliance in the business environment.

Due to this, it is crucial that companies implement adequate compliance mechanisms, which allow them to comply with their tax obligations, in order to prevent possible irregularities or non-compliance that may result in sanctions and legal and reputational liabilities.

Regulatory compliance and a proactive approach to tax compliance are essential to ensure the proper functioning of companies in the context of tax obligations and current legal regulations.

Column written by our tax group director, David Ancelovici.

Source: America Retail, June 27, 2023.

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