Harris Gomez Group

You Are Viewing

A Blog Post

Chile Tax Update: The New Digital Services Tax

In accordance with the tax reform approved in March this year, it is important to highlight that services provided in digital form will be subject to 19% VAT starting in June. This will be relevant to not only the larger digital services companies such as Netflix or Google but also companies that provide their software through a SAAS model. This includes many mining software companies who over the years have used this model to invoice directly from their home countries.

In Article 8 of the VAT Law, the law establishes a new special taxable event for certain services carried out by providers who are domiciled or residents abroad.

What digital services are included?

  1. The intermediation of services provided in Chile, or sales made in Chile or abroad, provided that the latter gives rise to an import;
  2. The provision of digital entertainment content, such as videos, music, games or other analogous content, by means of downloading, streaming or other technology, including texts, magazines, newspapers, and books;
  3. The provision of software, storage, computing platforms or infrastructure; and
  4. Advertising, regardless of the medium through which it is delivered or executed.

How do you prove if the service is being used in Chile?

One of the elements relevant to the application of VAT to a given service is the territoriality of the service, which is regulated in Article 5 of the Law.

For these purposes, the aforementioned article 5 of the VAT law is also amended stating that it will be presumed that the digital service is used in Chile if at least two of the following situations occur at the time of contracting or making payment:

  1. The IP address of the device used or other geolocation mechanism indicates that it is in Chile;
  2. The payment method used for payment is issued or registered in Chile;
  3. The address registered for billing or issuance of the payment receipt is in national territory; or
  4. That the SIM card of the mobile phone through which the service is received has Chile as its country code.

Who is obliged to withhold, declare and pay VAT considering that the service provider is domiciled or resides abroad?

-If the beneficiary of the service is a VAT payer, the change of subject will be applied, therefore the person obliged to declare and pay the tax will be the beneficiary of the service. In this case, the beneficiary of the service shall be entitled to the tax credit.

-In the event that the beneficiary of the service is not a VAT payer, as could be the case of a natural person, the company providing the service shall be subject to the Simplified Regime for non-domiciled taxpayers and non-residents in Chile, established in Article 35 A and following of the VAT Law. In this case, these taxpayers will not be entitled to a tax credit and will not be required to issue tax documents for their operations. If the beneficiary of the service is a VAT payer, the person obliged to declare and pay the tax shall be the beneficiary of the service.

In the event that the company providing the service, domiciled or resident abroad, does not submit to the above-mentioned simplified regime, the SII may provide, by means of a well-founded resolution, that the issuers of payment, debit, credit or other similar payment systems, who intermediate the payment of the service, to withhold all or part of the VAT. In practicality, this means that the credit card companies would withhold the 19% VAT from the amount being paid from the customer in Chile.

Conclusion

This part of the reform will come into force on the 1st of June 2020. The reality is that there is very limited information at this time on some of the finer points of how exactly this law will be enforced. With that being said, it is important for companies who provide digital services from abroad to understand how this may affect their business.

It is in our view that companies who provide business to business (B2B) software solutions may increasingly be requested by their clients in Chile to be invoiced in-country so they do not need to withhold the money. It will also be increasingly likely that it will make sense for companies who do not have a local presence to have a local entity so they can charge VAT and make use of the credit themselves.

Lastly, there is no doubt that the companies providing digital services will need to review their billing processes, register under the simplified regime for non-domiciled taxpayers, and most likely increase their prices to take into account the 19% VAT.

We expect over the next few months that some of the more practical points of the law will become more clear. We will be providing further updates as more information is provided by the Chilean tax office.

Harris Gomez Group is a Common Law firm, with offices in Santiago, Bogotá, and Sydney. We also have legal teams in Peru, Bolivia, Ecuador, Brazil, and Argentina. Over the last 19 years, we have been supporting foreign companies with their growth in Australia and Latin America. Many of our clients are technology companies, service providers and engineering companies that focus on the mining, energy and infrastructure markets.

To better understand how we can support your management team in the Region, please contact Cody Mcfarlane at cmm@hgomezgroup.wwwaz1-lr5.supercp.com


Los “SERVICIOS DIGITALES” y el impuesto IVA

De acuerdo con la reforma tributaria aprobada en marzo recien pasado, queremos destacar el nuevo hecho gravado con IVA, los servicios prestados en forma digital.

En el artículo 8 de la Ley de IVA se agregó una nueva letra n), la cual establece un nuevo hecho gravado especial, que son los siguientes servicios remunerados realizados por prestadores domiciliados o residentes en el extranjero:

  1. La intermediación de servicios prestados en Chile, o las ventas realizadas en Chile o en el extranjero, siempre que éstas últimas den lugar a una importación;
  2. El suministro de contenido de entretenimiento digital, tal como videos, música, juegos u otros análogos, a través de descarga, streaming u otra tecnología, incluyendo textos, revistas, diarios y libros;
  3. La puesta a disposición de software, almacenamiento, plataformas o infraestructura informática; y
  4. La publicidad con independencia del soporte o medio a través del cual sea entregada o ejecutada.

Uno de los elementos relavantes para afectar con IVA a un determinado servicio, se refiere a la territorialidadde los mismos, lo que se regula en el art. 5 de la citada Ley.

Para estos efectos, el citado articulo 5to. de la ley del IVA tambien se modifica señalando que se presumiráque el servicio digital es utilizado en territorio nacional, si al momento de contratarloso efectuar su pago, ocurriesen a lo menos dosde las siguientes situaciones:

  1. La dirección IP del dispositivo utilizado u otro mecanismo de geolocalización indiquen que se encuentra en Chile;
  2. El medio de pago utilizado para el pago se encuentre emitido o registrado en Chile;
  3. El domicilio registrado para la facturación o emisión del comprobante de pago se encuentre en territorio nacional; o
  4. Que la tarjeta SIM del teléfono móvil mediante el cual se recibe el servicio, tenga como código de país a Chile.

¿Quien es el obligado a retener, declarar y pagar el IVA considerando que el prestador del servicio se encuentra domiciliado o resida en el extranjero?

  1. Si el beneficiario del servicio es contribuyente de IVA, se aplicará el cambio de sujeto, por lo tanto, el obligado a declarar y pagar el impuesto será el beneficiario del servicio. En este caso el beneficiario del servicio  tendrá derecho a credito fiscal.
  2. En caso que el beneficiario del servicio no sea contribuyente de IVA, como podria el caso de una persona natural, la empresa que presta el servicio deberá someterse al Regimen Simplificado  de contribuyentes no domicliados ni residentes en Chile, consagrado en el artículo 35 A y siguientes de la Ley de IVA. En este caso, estos contribuyentes no tendrán derecho a crédito fiscal y ni obligación de emitir documentos tributarios por sus operaciones. 

En caso que la empresa prestadora del servicio domiciliada o residente en el extranjero no se someta al Regimen Simplificado señalado, el SII podrá disponer mediante resolución fundada, que los emisores de tarjetas de pago, debito, crédito u otros sistemas de pago analogos, quienes intermedian el pago del servicio, retengan el total o una parte del impuesto IVA.Entrada en vigencia: 1º de Junio de 2020