Chile Tax Agency Clarifies Use of Related Companies to Acquire VAT-Exempt Goods, Tax Refunds

The Chilean Internal Revenue Service Oct. 25 issued Letter No. 2713, clarifying the use of related companies for purposes of acquiring VAT-exempt goods and obtaining tax refunds. The taxpayer established two entities with a common shareholder, with one acting as a ship service provider and the other as a ship agent, to secure VAT-exempt goods and tax refunds. The tax agency clarified that: 1) services provided by the ship service provider to shipping companies in Chile are subject to VAT, and the shipping companies can recover VAT incurred in acquiring the supply; 2) the operation’s purpose, the relationship between the ...