Chile: local rules

Chile applies the arm's length principle in article 41 E of the Income Tax Law (Ley sobre Impuesto a la Renta, DL 824). The SII can challenge the prices, values or profits of cross-border dealings with related parties abroad, or set them if none was set. It also covers business reorganisations that move functions, assets, risks or activities in or out of Chile. Parties are related if one takes part directly or indirectly in the management, control, capital, profits or income of the other, or the same people do so in both. A branch or permanent establishment is related to its head office. Dealings with any party in a preferential tax jurisdiction (article 41 H) count as related, whether or not it is in the same group. Law 21.713 widened and tightened these rules from 1 November 2024 (art. 41 E No. 1 and No. 4).

The statute does not require a stand-alone local file with a due date. A taxpayer may attach a transfer pricing study and must keep all support available, including data of the foreign related parties (art. 41 E No. 3). The SII instead requires four annual sworn statements under art. 41 E No. 6. DJ 1907 is the transfer pricing return: it is due from companies the SII classes as medium or large that deal with foreign related parties, and from any other taxpayer whose foreign related party dealings exceed CLP 500m. DJ 1937 is the CbC report from a Chilean parent of a group with revenue of EUR 750m or more, or from a Chilean group entity named as the single substitute filer. DJ 1950 is the master file, filed by the same Chilean parent. DJ 1951 is the local file, filed by large companies whose group files a CbC report and that have foreign related party dealings above CLP 200m. All four are due on 30 June, which the SII confirms each year (Res. Ex. 135 of 2026 for 2027). Any filer that files between 1 July and 30 September is treated as having used the one-time 3-month extension (Res. Ex. 64 of 2024), which also lengthens the SII audit period. The master and local file papers go in the SII electronic file, in Spanish or English.

Art. 41 E No. 2 lists six methods: comparable uncontrolled price, resale price, cost plus, profit split, transactional net margin, and residual (other) methods. Residual methods are only for cases where the first five cannot be applied, and the taxpayer must justify why. There is no strict order. The taxpayer picks the most appropriate method, looking at the pros and cons of each, data, comparables, the tested party, the number of years used and comparability adjustments. If there are two or more comparable results, an interquartile range must be used. A result outside the range is not at arm's length. When the SII issues an assessment the adjustment goes to the median. If the taxpayer accepts the SII's analysis, the adjustment can go to a single figure or any point in the range that is agreed. Taxpayers may self-adjust upward before the SII asks (No. 9), and may ask for advance pricing agreements (No. 7) and corresponding adjustments (No. 8).

A missing, wrong, incomplete or late sworn statement under art. 41 E No. 6 is fined 10 to 50 UTA (annual tax units). The fine cannot exceed the higher of 15% of the taxpayer's own capital or 5% of its effective capital. A maliciously false statement falls under Tax Code art. 97 No. 4, which has a fine of 100% to 300% of the tax avoided and prison. A transfer pricing adjustment is taxed only with the 40% single tax in the first paragraph of LIR art. 21, plus a 5% fine on the difference unless the taxpayer gave the SII the requested papers on time during the audit (No. 4). Interest also applies. The adjustment has no effect on other taxes such as VAT. A late filing of the annual return is fined 10% of the tax, plus 2% per month after 5 months, up to 30% (Tax Code art. 97 No. 2).

Chile has not enacted Pillar Two. There is no GloBE, income inclusion rule, UTPR or domestic top-up tax law. Law 21.850, published on 17 October 2026, cuts the corporate rate but contains no minimum tax rules, and no Pillar Two bill appears among the bills Ley Chile links to the Income Tax Law. There are no Pillar Two filings or deadlines for Chile.

The annual income tax return (Form 22) is filed in April for the previous calendar year (LIR art. 65 No. 1 and art. 69), so 30 April, with Chile's tax year set as the calendar year. Companies that close their books in June file in October (art. 69 No. 1), which is not modelled. Deadlines in months move to the next business day when they end on a Saturday, Sunday or holiday (Tax Code art. 10), and tax return and payment dates that fall on a holiday, a Saturday or 31 December move to the next business day (art. 36), so rollWeekends is true. The SII dates for the four sworn statements are already set on a working day and are not moved. Chile also has a thin capitalisation tax of 35% on excess related party debt (art. 41 F), a CFC regime (art. 41 G) and a preferential regime list (art. 41 H). Under Law 21.850 the first category tax rate for companies in the general regime is 27% for 2026, 25.5% for 2027, 24% for 2028 and 23% from 2029. When the SII audits, it first cites the taxpayer under Tax Code art. 63, and the taxpayer has one month to answer, extendable once by up to one month.