Chile Tax Agency Clarifies Corporate Tax Credit Allocation on Dividends Under DTA, Protocol with China

The Chilean Internal Revenue Service April 15 issued Letter No. 794, clarifying the provisional allocation of corporate income tax credits on dividends paid to nonresident shareholders, under the 2015 DTA and protocol with China. The taxpayer, a Chilean corporation, distributed dividends to a nonresident shareholder while holding accumulated losses and a limited credit balance. The taxpayer inquired whether it must impute the full theoretical credit, when withholding additional tax, despite insufficient credits in its accumulated credit register. The Tax Agency clarified that: 1) dividends paid to nonresidents are subject to an additional 35 percent tax rate, with the right to ...