Chile Tax Agency Clarifies Withholding by Pension Fund Administrators, Institutions Managing Voluntary Pension Savings

The Chilean Internal Revenue Service May 20 issued Letter No. 1197, clarifying 15 percent withholding by pension fund administrators and authorized institutions managing voluntary pension savings. A taxpayer sought clarification regarding application of the rate. The Tax Agency clarified that: 1) under the Income Tax Law (LIR), the 15 percent withholding operates as a credit against the single tax on the funds withdrawn, and as a provisional payment; 2) if there is a surplus after applying it as a credit, it can be refunded or applied against other tax liabilities for the relevant year; 3) the single tax on the ...