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Explaining Developments in Digital Tax in Latin America

Explaining Developments in Digital Tax in Latin America

Economies in Latin America are changing rapidly. One important regulatory development for many countries in the region is digital tax, because it captures services delivered online or electronically. The OECD claims that Latin American economies are making real progress to address the tax challenges arising from the digitization of the economy. This international entity also expects that further digital tax developments in Latin America provides stability and certainty in the international tax system.  Managing your company while keeping a careful watch over new regulations is one of the challenges to overcome while doing business in Latin America.  We provide an explanation of digital tax developments in several emerging and developing economies in Latin America, so your business understands its obligations when offering digital services in these markets. Digital tax developments in Argentina  Latin American countries are adapting to a new digital age with the establishment of digital services taxes across the region. The Argentine government levied taxes for digital services under law 27,430 and on a general basis. This regulation includes services carried out through the Internet network or any adaptation or applications, platforms or technology used by the Internet or other networks through which equivalent services are provided. By their nature, these services are basically automated and require minimal human intervention, regardless of the device used for its download, display or use. The regulation of digital services in Argentina has been in place since 27...

A Quick Guide to Value Added Tax (VAT) in Chile

A Quick Guide to Value Added Tax (VAT) in Chile

No one is a stranger to the fact that understanding tax and corporate compliance are essential to the good standing of any business operating globally. Tax law and regulation varies greatly between countries, and for businesses operating in various jurisdictions, complications can arise due to these variations.  Chile has many tax and bookkeeping requirements which must be met by all corporations operating in the region. Probably one of the most standard tax compliances across the board, including Chile, is the 'Value-Added Tax', commonly known as 'VAT' (or 'IVA' in Spanish-speaking Latin America).  What do we understand by Value Added Tax (VAT) in Chile?  VAT is a consumption tax incorporated into the value of goods and services whenever value is added at any stage of the supply chain. How much is VAT in Chile? In Chile, VAT reaches 19% - indicating a surcharge of 19% on top of the normal price of the good and/or service. How does the VAT system work in Chile? The final consumer will suffer the economical burden of paying the tax without having the possibility of getting that 19% reimbursed. This is mandatory for final consumers. The way tax authorities make sure that this tax is paid for is by the adequate use/register of receipts and invoices. A debit/credit system takes places where the seller of a good or services charges VAT to the next party down the line and buy charging this surcharge, a credit in favor of the Government is born/accrued. This means that the seller needs to pay back the Government - completed via a monthly VAT declaration.  In light of the above,...

Costa Rican Business Accounting and Company Tax Requirements

Costa Rican Business Accounting and Company Tax Requirements

Costa Rica is a great country to invest in and/or to move your company.  It has a booming tourism industry and is breaking records year on year with its astonishing performance in the clean energy sector.  As with all countries, it is necessary to know the fiscal requirements for all companies and investors in Costa Rica. This article will provide a brief analysis of the different tax and accounting rules. Accounting Requirements - Types of Companies in Costa Rica Before outlining which are the taxes that must be paid by a company in Costa Rica, it is necessary to outline the difference between a: Contributing Society: A society which has been written into the Unique Tributary Register (RUT) in the Treasury Department, and fulfils monetary activities A non-contributing society: No contributing societies do not complete any type of paid/financial activity, and therefore do not pay any tax Taxes on Legal Entities  All Legal Entities or Persons must pay an annual tax as stated in Law 9024 of the Legal Persons Tax. The amount of this tax varies according to the type of commercial activity and the income of the company according to the % of base salary. As of 2018, this amount is set at ₡431,000.  Non contributing societies pay a base rate of 15% of salary, about ₡65.000 (approx. USD$110). The same amount is applied to societies inscribed in the RUT which do not declare income tax. For contributing societies: The Societies that do not declare activity, declare income on 0 or less than 120 base salaries.  Societies with gross incomes of between 120-280 base salaries pay 30%....

How and Why You Should Defer VAT Payments in Chile

How and Why You Should Defer VAT Payments in Chile

As a small or medium sized business, it is very important to manage cash-flow. To assist with this there are a number of mechanisms available to help, one specifically is the ability to delay the payment of Value Added Tax (VAT). By delaying this payment, you can increase the amount of cash being held by the business, which can be used to help fund existing operations or to fund future expansion. This is why it is essential that your financial management team or provider of financial services have a comprehensive understanding of Chilean financial and accounting laws and regulations. How Does the Value Added Tax (VAT) Function in Chile? In Chile, the VAT on goods and services is 19%. Specifically, any sale equal or greater the $180 Chilean pesos must pay a 19% VAT (Called IVA, Impuesto al Valor Agregado in Chile). The Chilean Government offers Micro, Small, and Medium Enterprises (MSMEs) the possibility of deferring the date of payment of the VAT for up to two months after the initial due date. To defer VAT payment, companies must be part of the simplified taxation regime or the simplified general accounting regime. Moreover, only taxpayers that declare via the internet can take advantage of this benefit. To use this benefit in 2016, the income of companies cannot exceed the 100,000 UF (In Chile, Unidad de Fomento or UF, it’s a unit determined by Consumer Price Index). For 2017 and onwards, companies’ average annual income cannot exceed 100,000 UF during the last three commercial years. Keep in mind that as of September 1, 2016, one UF is equivalent to CLP$26,210.79...

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