Our partner Rodrigo Albagli spoke with Diario Financiero about the challenges posed by the Mega Tax Reform for companies and the importance of anticipating its effects and gradual changes.
The implementation of the National Reconstruction Act will require more than just familiarity with its new provisions. The changes will also require companies to analyze their effects comprehensively, anticipate their gradual implementation, and strengthen coordination among the various departments involved.
According to Nicolás Martínez, a professor at the Adolfo Ibáñez University Business School, it will be essential for lawyers, accountants, and auditors to work in a coordinated manner, especially to identify the advantages and changes that the law could bring to the business environment and the added value of future projects.
“Large companies will have no choice but to conduct a thorough review of their current projects, both those accepted into the portfolio and those rejected. After all, the reform’s most significant focus is on reconstruction, and that implies investment,” the scholar emphasizes, warning that in this challenge, “working in silos and using jargon that other departments do not understand will only destroy economic value for companies.”
Anticipating Effects
The need for integration also extends to accounting and finance teams. Roberto Bustamante, national president of the Chilean Association of Accountants, warns that the challenge will lie in correctly translating the changes into financial records, estimates, controls, and decisions.
“A reform of this magnitude requires tax and accounting teams to carefully review the effects on deferred taxes, the determination of tax bases, cash flow planning, business records, and potential impacts on equity,” he states.
Raimundo López Auditores Consultores agrees with this assessment and argues that a change of this magnitude “transforms the accounting function from a purely transactional and compliance-oriented role to one that is strategic and predictive.”
As the consulting firm explains, financial teams will need to simulate cash flow scenarios, evaluate the cost of capital, and restructure budget planning, taking into account the financial leeway or pressure that tax changes generate year after year.
Updates and Coordination
But coordination must also be accompanied by ongoing updates. Gonzalo Polanco, director of the Center for Tax Studies and director of programs in the Executive Taxation area at the University of Chile’s School of Economics and Business, warns that understanding these changes involves not only knowing the new law but also the interpretations subsequently issued by the tax authority.
“The tax provisions of the Reconstruction Act are broad and affect a significant number of taxpayers, not just the largest ones. Therefore, I believe it is necessary for advisors to all types of companies and individuals to stay up to date,” he emphasizes.
Rodrigo Albagli, a partner at az, adds that the role of tax attorneys will also need to change with the implementation of this legal reform, shifting toward a collaborative effort from the outset rather than a legal review at the end of the process.
The attorney adds that, in a scenario of gradual changes, it will be crucial to anticipate the modifications rather than react once they take effect, since the transitional periods are brief (12 months for the declaration of assets and income held abroad and only eight months in the case of the substitute tax, in addition to one year for donations).
“Conducting an initial assessment today allows us to consider scenarios that will take shape over the coming months—in many cases, pending the guidelines the SII may issue through circulars and official letters. Anyone who waits until the law is published to begin analyzing their situation will likely be unable to implement it in time,” warns Albagli.
In this context, the national president of the Association of Accountants emphasizes that coordination with attorneys and tax advisors will be especially necessary in three areas: the interpretation of requirements, deadlines, and conditions for accessing benefits or transitional regimes; transactions with structural effects; and the documentation of the economic purpose and rationale behind decisions in the event of a review by the tax authority.
“Practice shows that the greatest contingencies do not always arise from a mathematical misapplication of the tax, but rather from poor coordination between departments,” Bustamante points out.
