An important choice that companies funding their Chilean
entities need to make is the form in which they do this— by
debt or equity. In many cases, a good tax strategy is to use debt
because at some point when the local entity is creating profit,
this allows the debt to be repaid without any withholdings
taxes.
What many do not know is that loan agreements often have taxes
associated with them. It is very common for companies to fund their
local entity without properly recording the operation or paying the
associated taxes. The risk is that if audited, the entity is then
subject to fines.
The statute of limitation is 3 or 6 years depending on the good
faith of the taxpayer. Only once this time has passed by, counted
from the date of birth of the obligation, the taxpayer may write of
this tax liability.
