Chile: New reporting and VAT obligations for digital platforms, remote sellers
While the bill still needs to go through some minor legislative steps before officially becoming Law, no material changes are expected.
The Chilean Congress approved the Tax Compliance Bill (Proyecto de Ley de Cumplimiento de las Obligaciones Tributarias), which among other things, will introduce new reporting obligations for platform operators, clarify the value added tax (VAT) obligations for platform operators, and introduce new VAT collection obligations for remote sellers of goods to consumers in Chile.
While the bill still needs to go through some minor legislative steps before officially becoming Law, no material changes are expected. These amendments are expected to become effective 12 months after the publication of the law in the official gazette, except for the new reporting obligations for platform operators, which should become effective six months after the publication of the law.
New reporting obligations for platform operators
The bill requires that operators of digital intermediation platforms must verify that entities offering products or services have initiated activities with the tax authority, unless they are explicitly exempted. The platform operators will be required to report annually to the tax authority details of registered entities and those who declared no need to initiate activities, including the number of operations and their total amount.
Unlike the OECD marketplace reporting rules, the bill does not further define the scope of platform operators, which transactions are subject to the reporting requirements, and any specific exclusions. In this respect, the bill instructs the tax authority to regulate the manner of compliance through further resolutions.
Clarification of VAT sourcing rules for remote services
Since June 1, 2020, foreign digital service providers to charge and remit VAT on digital services provided to Chilean consumers. Effective January 1, 2023, Chile broadened to VAT base to include most services as taxable services. However, this reform did not clarify the sourcing rules for remotely provided services beyond digital services that were in the scope of the 2020 changes. The bill provides for a sourcing presumption for all remote services (not limited to certain taxable event, as it is currently) when two out of four are in Chile: SIM card, IP address, bank information, declared domicile of the consumer.
Clarification of VAT obligations of digital platforms
The bill clarifies that the operator of a digital intermediation platform is deemed a taxpayer for transactions subject to VAT, as if they were the seller or service provider. This obligation does not apply to sales made by or to a VAT-registered taxpayers. A digital intermediation platform is defined as an internet interface that facilitates third-party sales or services, excluding platforms solely for advertising or payment processing. If multiple platforms facilitate the same transaction, only the one processing the payment is considered the taxpayer.
It should be noted that the bill is unclear whether the status of VAT-registered taxpayer is limited to Chilean businesses or would also include non-resident sellers that are required to register for VAT in Chile because they make direct sales of goods or services to consumers in Chile.
New VAT collection obligation for remote sellers of low value goods
Scope
Non-residents sellers of goods sold remotely to final consumers in Chile if the consignment value (i.e., the price of the goods plus any ancillary cost charged on the same transaction) does not exceed $500 would be liable to register for and collect VAT. VAT would no longer be assessed at time of importation.
B2C vs. B2B
The regime applies to sales of goods made to final consumers (“B2C sales”) located in Chile.
Marketplace rules
The bill shifts the VAT liability to digital platforms (as defined above) facilitating the sale of such goods.
Registration
The bill would expand the simplified VAT compliance regime currently applicable to remote sellers of services to remote sellers of goods. As a reminder, the current simplified compliance regime does not include a VAT registration threshold.
VAT invoicing
The bill does not include any invoicing requirements for remote sellers of goods.
Penalties
General penalty provisions contained in the tax code will apply.
KPMG observation
While the law is being finalized and the tax authorities are expected to issue further regulations and guidance on these amendments, non-resident businesses should start assessing whether they will be impacted given the broad scope of these new rules taking into account their specific supply chains.
For more information, contact a KPMG tax professional:
Philippe Stephanny | philippestephanny@kpmg.com
Javiera A Suazo | javierasuazo@kpmg.com
Juan Infante | juaninfante@kpmg.com
Francisco Rocca | frocca@kpmg.com