Chile

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Overall Phase 2 Rating is Largely Compliant

Table of Determinations and Ratings of the Phase 2 Review

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Largely Compliant.  The provision requiring foreign companies with nexus in Chile to disclose ownership information to the tax authorities will enter into force on 1 January 2015.   The Chilean authorities should monitor the implementation of the Circular on the disclosure of ownership information of foreign companies to the tax authorities, once in force.  
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Banking information should be available for all account-holders. (ToR A.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Chile’s ability to access bank information prior to 1 January 2010 is not complete under its domestic legislation, as information covered by bank secrecy on deposits and current accounts activity and balances prior to 1 January 2010 is not accessible for civil purposes, even where the information relates to taxable periods or events after that date.  Chile should ensure that all relevant bank information, which relates to a taxable period after 2010, may be accessed for exchange of information purposes, to ensure that they can fully exchange information to the standard. 
Phase 2 Rating Factors Recommendations
Partially Compliant.  The inability to get bank information on transactions performed before 1 January 2010 has prevented full exchange of information in practice. Chile has never gathered banking information from banks for exchange of information purposes in practice. The effectiveness of the access powers cannot be assessed.   Chile should ensure that all relevant bank information may be accessed for exchange of information purposes and monitor the implementation of the access powers in practice. 
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   The Chilean competent authority must inform the bank of who is the requesting authority and of the basis for the EOI request. No exception exists to this requirement or anti-tipping off provision.  Chile should ensure that appropriate exceptions exist to informing the person who is asked to produce information which foreign tax authority had requested the information (e.g. in cases in which informing that person is likely to undermine the chance of the success of the investigation conducted by the requesting jurisdiction). 
When a specific accountholder has not given a general authorisation to the bank to disclose any information to the tax authorities, the Tax Code requires the prior notification of the person concerned when there is a request for bank information and this prior notification procedure does not allow for any exception.  It is recommended that certain exceptions from prior notification be permitted, e.g. in cases in which the information requested is of a very urgent nature or the notification is likely to undermine the chance of the success of the investigation conducted by the requesting jurisdiction. 
Phase 2 Rating Factors Recommendations
Partially Compliant.     
Exchange of information mechanisms should provide for effective exchange of information. (ToR C.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   A provision in Chile’s legislation and some EOI instruments limit the ability of the competent authority to use its access powers and exchange some banking information on transactions pre-dating 1 January 2010. Whereas the Multilateral Convention may address the issue, it is not in force and thus its application remains to be tested.  Chile should ensure that its exchange of information mechanisms allow for effective exchange of information, including exchange of banking information to the standard. 
Phase 2 Rating Factors Recommendations
Largely Compliant.     
The jurisdictions' network of information exchange mechanisms should cover all relevant partners. (ToR C.2)
Determination Factors Recommendations
The element is in place.     Chile should continue to develop its network of EOI mechanisms with all relevant partners. 
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdictions' mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5)
Determination Factors Recommendations
The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase 2 review.      
Phase 2 Rating Factors Recommendations
Largely Compliant.  Chile did not provide an update or status report to its EOI partners within 90 days when the competent authority was not able to provide a substantive response within that time.   Chile should ensure that the new system put in place to provide updates to EOI partners within 90 days in those cases where it is not possible to provide a partial or complete response within that timeframe operates effectively.  
The structure of the competent authority and management of the EOI requests has changed in 2012, and new internal deadlines and monitoring procedures have been introduced. Although the change of organisation of the competent authority of Chile slowed down the exchange process during the transition period, Chile has generally been able to answer in a timely manner. Training programmes are also being developed for regional offices. Some communication issues have nonetheless been identified.   Chile should ensure that the new internal deadlines enable it to respond to EOI requests in a timely manner, and continue improving communication with partners.  

Earlier self-assessment based annual reports entitled Tax Co-operation 2010: Towards a Level Playing Field are also available.