What types of expenses does Chile's IRS allow a company to
deduct from its financial profit (gross income)?
It is common knowledge that companies must only pay taxes from
the profit forming part of its taxable base and that which they
have made during a certain tax period. The taxable base corresponds
to the financial profit of a tax period, inclusive of
adjustments.
In Chile, the corporate tax rate applied to gross income
currently stands at 20%. However, Chile's recent tax reform is
set to increase this rate to 27% as early as 2017, depending on the
tax system chosen.
Companies always want to portray an image of stability and
profitability in their financial statements, whilst other taxpayers
will usually want to appear to have a lower taxable net income.
Therefore, issues commonly arise where taxpayers try to incorrectly
deduct expenses that they claim are "necessary to generate
(gross) income". Whilst debate surrounds this issue, only the
tax authority and
