Chile Tax Agency Clarifies VAT on Property Development Joint Venture

The Chilean Internal Revenue Service April. 29, issued Letter No. 1439, clarifying the VAT treatment of income from a property development project. A property manager and a property owner were considering entering into a joint venture to subdivide and develop a plot of land. The property manager and the owner sought clarification as to the application of VAT to the property developments, and to future sales of the property. The tax agency clarified that: 1) while the land itself isn’t subject to sales and services taxes, developments to the land become VAT-taxable once they qualify as improved real property; and ...