International Tax 2026

CHILE Law and Practice Contributed by: Javier Cortés, Juan Pablo Márquez and Gonzalo Pérez, Cortés Del Río Tax & Legal

5.2 Anti-Avoidance Mechanisms Chile has a comprehensive set of Specific Anti-Avoid - ance Rules (SAAR) that complement the GAAR, which are explained below. • Transfer pricing rule: according to this provision, transactions between related parties must be at arm’s length. In this regard, Chile follows the OECD Transfer Pricing Guidelines as the primary interpre - tative framework. The Chilean IRS has the authority to reassess prices and values if the one agreed by the parties is not at arm’s length. Where an adjust - ment is made by the tax authority, a 40% penalty tax applies on the difference determined. • CFC rules: according to Chilean general tax rules, foreign income is taxable in Chile on a cash basis. However, passive income earned by foreign entities controlled by Chilean residents (a CFC) is attrib - uted to the Chilean resident on an accrual basis. Control is defined broadly to include direct and indirect holdings and acting-in-concert arrange - ments. According to this provision, passive income includes, among other things, dividends of non- controlled entities received by the CFC, interest, royalties in certain cases, income from real estate (except if the CFC is a real estate company) and capital gains arising from the disposal of certain assets. • Thin capitalisation rules: these rules apply when a Chilean entity and the foreign lender are related or deemed related and the loan qualifies for a reduced WHT rate on interest and other loan charges, whether under domestic rules or under a double tax treaty. Excessive indebtedness will be deemed to exist when the Chilean debtor’s total indebtedness (including entities incorporated or resident abroad, be they related or not to the debtor) exceeds three times the taxpayer’s tax equity at the end of the respective year (3:1 debt/ equity ratio). If the Chilean entity is excessively in debt, interest on the portion of the loan deemed excessive is subject to a thin capitalisation tax of 35%, which is payable by the borrower, with the WHT paid available as credit. • Preferential tax regimes blacklist: transactions with entities located in jurisdictions listed as preferential tax regimes are subject to penalties and restric - tions.

• reducing the taxable base or tax liability; or • postponing or deferring the triggering of a tax. In general terms, Chilean law follows what in inter - national doctrine is known as the “business purpose test”, which aims to reveal the economic or legal sub - stance over the forms presented in a particular opera - tion or transaction. The Chilean GAAR enables the taxpayer to opt between conduct and alternatives or mechanisms available pursuant to the tax legislation. Therefore, the sole circumstance that the same juridical or economic result may be achieved by carrying out juridical acts or transactions that cause a higher tax burden is not constitutive of an abusive act. Simulation Simulation for tax purposes is when the legal acts or transactions carried out by the taxpayer contribute to disguising a taxable event, the elements that trigger a tax liability, or the amount or date of occurrence of the taxable event. Catalogue of Tax Schemes Since 2021, the Chilean IRS has published a “Cata - logue of Tax Schemes”, which is updated annually. This is a list of aggressive tax planning schemes iden - tified by the Chilean IRS as potentially abusive. The catalogue serves as a transparency and deter - rence tool. Taxpayers who carry out schemes and implement structures included within the listed schemes should be aware that the tax authority may challenge the scheme under the GAAR. The catalogue includes several structures and schemes covering areas including dividend stripping, artificial fragmentation of transactions, and misuse of treaty benefits. Tax Evasion Tax evasion refers to unlawful conduct intended to reduce taxable income, falsify records or deceive the tax authority, and is subject to criminal sanctions under Article 97 of the Tax Code (see 6.2 Criminal Penalties ).

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