Chile: updates on Termination of Business and its implications
On April 17, the Chilean Internal Revenue Service (SII) published Circular N°32, introducing key changes to the Termination of Business process. This procedure, regulated by the Tax Code and updated in October 2024 by Law N°21.713, is fundamental for the proper closure of operations for any entity in the country.
This regulation redefines key aspects, specifies the SII’s audit powers, and establishes new presumptions for Termination of Business. It is important to note that the failure to file declarations for several consecutive periods can expose companies in Chile to SII reviews.
What is Termination of Business?
Termination of Business is an administrative process that allows taxpayers who have ceased their economic activities to comply with their corresponding tax obligations. This includes the payment of taxes and the certification of Termination of Business. Additionally, it authorizes the SII to review the accuracy of the declarations filed and update its databases to avoid subsequent audits.
Stages
Beginning
The initial stage of the process is the Notice of Termination of Business, which must be filed by taxpayers within two months following the cessation of activities. To submit this notice, an online form must be completed. This must be accompanied by the final balance sheet, tax determinations, and other relevant documents.
Review of the Application
Next, the SII will begin the Review Process, which can extend for six months to review and assess taxes. This period will only begin once the SII declares the procedure as Admitted. However, this period can be extended by three additional months if new irregularities or inconsistencies are detected.
Certification
The final stage of the process is the Certification of Termination of Business, which will be issued once validated by the SII. Confirmation will occur through the payment of any taxes assessed as a result of the review. Likewise, if no assessment is issued within the specified period, the process will be automatically certified by the system.
Scope of SII’s audit powers
The SII is authorized to summon, assess, and levy taxes in cases where the cessation of a company’s activities is detected without the corresponding notice from said company. This will apply particularly in cases where companies have failed to file their tax declarations for more than 18 months or up to two consecutive years.
Legal presumption of Termination of Business
In cases where the taxpayer has not filed monthly declarations with the SII for six consecutive periods, the SII is authorized to take actions to confirm the cessation of activities. Then, if no response is received from the taxpayer within six months, a Termination of Business is legally presumed. Conversely, if the monthly periods without declarations extend to 36 months, the presumption of Termination of Business will apply automatically.
Tax compliance is an essential pillar in the lifecycle of any entity. Given the complexity and recent updates to the Termination of Business in Chile, having expert advice is fundamental to ensuring efficient and transparent management.
If your multinational or fund seeks to ensure an impeccable tax transition in Chile or requires support in managing its obligations, our team is at your disposal. We invite you to contact us via our form for a personalized consultation.
At Auxadi, we offer comprehensive services in accounting, tax, payroll, and corporate legal services to multinationals and funds. With experience since 1979 and a presence in over 50 countries, including 22 proprietary subsidiaries, our advanced technological platform and proven methodology enable us to guarantee efficient management in compliance with local regulations.
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All information contained in this publication is up to date on 2024. This content has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice.No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this content, and, to the extent permitted by law, AUXADI does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.
