|
On 8 March 2023, the Government of President Gabriel Boric suffered a major setback as the Chamber of Deputies rejected the tax reform bill that has been under discussion in Congress since July 2022 (for background, see EY Global Tax Alerts, Chile’s Congress to discuss tax reform proposal, dated 11 August 2022 and Chile’s Executive Power modifies tax reform bill, dated 24 October 2022).
In a tight vote, the bill was rejected with 73 votes in favor, 71 against, and 3 abstentions (under the Chamber’s regulation, abstentions count as against votes since the quorum needed for passing a bill is 50% plus 1), with the abstentions being unexpected under the Government’s calculations.
The rejection of the bill means that the Government has the alternative to move forward in the Senate, for which it would need two-thirds of a quorum to get approval, or else let one year pass before filing a new bill. The Finance Minister Mario Marcel indicated that the Government would opt for the latter.
As the funding of the most important initiatives to be put forward by the Government depended on the 3.6% Gross Domestic Product additional revenue that the tax reform aspired to, it is to be expected that the bill (or a different one) will effectively be refiled in Parliament, once the one-year term, set forth by the Chilean Constitution, has passed.
However, there are two initiatives, within the same general tax reform initiated by the Government of President Boric, that will continue to be subject to discussion at Congress during the year aside of the rejection of this tax reform bill. One of these initiatives is related to the new mining royalty for the mining industry (currently under discussion in the Senate after the approval received in the Chamber of Deputies in 2021) and the corrective, green and regional taxes (separate bill of law that should be submitted for discussion at Congress within the next couple of months).
For additional information with respect to this Alert, please contact the following:
EY Chile, Santiago
Alicia Dominguez, EY Chile Energy and Mining Leader
Javiera Contreras, EY Chile Tax Leader
Felipe Espina
Juan Pablo Navarrete
Nicolas Brancoli
Victor Fenner
Ernst & Young LLP (United States), Latin American Business Center, New York
Lucas Moreno
Pablo Wejcman
Benjamin Mosella, Chile Tax Desk
Ana Mingramm
Ernst & Young LLP (United Kingdom), Latin American Business Center, London
Lourdes Libreros
Sofía Hernández, Chile Tax Desk
Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific
Raul Moreno, Tokyo
Luis Coronado, Singapore
- Patricio Velasco, Hong Kong, Chile Tax Desk
For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.
