Chile Tax Agency Clarifies VAT on Services Provided by Financial Institutions

The Chilean Internal Revenue Service Nov. 23 issued Letter No. 2719, clarifying the VAT on services provided by financial entities, which aren’t taxable under the income tax law. A taxpayer sought clarification on whether a financial services entity must pay VAT on income received from services that aren’t taxed under the income tax law. The tax agency clarified: 1) services provided by financial entities are subject to VAT when they come from their own financial activity; 2) services that don’t come from their own financial activity are subject to VAT according to the general tax rules; and 3) services that ...