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New Annual Affidavit "Country by Country Report" (Form No. 1937) for the 2017 tax year. The Declaration for the 2017 tax year must be submitted by June 30, 2017.

 

1. Background of the affidavit:

On December 27, 2016, the Chilean Tax Administration, Servicio de Impuestos Internos (SII) published the Resolution No. 126 in which it contemplates what is indicated in Exempt Resolution No. 14 of 2013, in which it establishes the obligation to present an Annual Affidavit of information on transfer prices Establishes the obligation to submit the Annual Affidavit entitled "Country Report by Country" to taxpayers who have subsidiaries abroad.

 

2. Form 1937 - Annual Affidavit - Country by Country Report

This new affidavit which takes effects on the 2017 tax year, must be submitted by the following
taxpayers:

A. Parent company of the Multinational Group of Companies, who is resident in Chile for tax purposes, to the extent that the income of all entities that form part of the Multinational Group, in the 12 months prior to the beginning of the corresponding tax period, is at least 750 million euros (approximately USD 785 million) at the time of the closing of the consolidated financial statements, according to the observed exchange rate at December 31 of the immediately preceding year, according to the information published by the Central Bank of Chile; or

B. Entity that is part of, or belongs to the Multinational Group of Companies, resident in Chile for tax purposes, and has been designated by the parent company of that Group, as its sole substitute, for purposes of filing the Affidavit " Country-by-Country Report " in the country where its it has their tax residence, on behalf of the parent company.

 

3. Sections of Form 1937 - Annual Affidavit Country by Country Report

The Annual Affidavit Country-by-Country Report should provide information related to:

  • • Identification of the Declarant.
    • Income, Taxes and Results by each country,
    • The Entities that are part of the International Group of Companies and the Activities by each country,
  • • The Multinational Group.

4. The submitting date of the Annual Affidavit Report Country by Country - Form No. 1937


The taxpayers who are obligated to submit the affidavit Nº1937 must file it, no later than the last business day of June of each year, in respect of the transactions carried out during the immediately preceding business year. This period may be extended for just one time, in the terms established in number 6 of article 41E of the Income Tax Law.

 

5. Sanctions

The non-presentation of the Annual Affidavit "Country by Country Report"; or, submitting it wrongly, incompletely or extemporaneously, all these situations will be sanctioned in accordance with the provisions of No. 6 of article 41 E of the Income Tax Law, with a fine of 10 to 50 Annual Tax Units (UTA) (from USD 8,000 to approximately USD 40,000), without exceeding the upper limit of 15% of the own capital of the reporting taxpayer determined in accordance with article 41 of the Income Tax Law, or 5% of its effective capital. In accordance with the provisions of the same legal norm mentioned above, the procedure of the fine will be in
accordance to what is established in No. 1 of article 165 of the Tax Code. If the affidavit that is submitted is maliciously false, it will be sanctioned in accordance with the provisions of number 4 of article 97 of the Tax Code.

 

6. Conclusions and recommendations:

 6.1. The first Annual Affidavit Country-by-Country Report shall be submitted in 2017 with respect to the operations carried out in the 2016 trading year.
 6.2. The Annual Affidavit Country-by-Country Report shall be filed in addition to Form 1907 on Transfer Pricing. Its incorporation is in the context of the OECD  Action Plan against Base

Erosion and Profit Shifting (BEPS), and corresponds to the Country-by-Country Report that requires multinational companies to declare annually, for each tax jurisdiction, the amount of their income and profits before corporation tax, as well as the amount of corporate tax, received and accrued.

 

 

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