Alex Fischer stood out at CETU Tax seminar

Aug 29, 2019Events, Featured, Tax Advisory and Litigation, Tax Reform

Alex Fischer addressed the amendment to the rule on expenses deduction, noting that the main issue is the freedom for business judgements. He stated that “the entrepreneur must have the freedom to decide how he conducts his business, to be creative, innovative and that there is the possibility of making mistakes. Therefore, the judgment on what expenses are necessary must be compatible with freedom for business judgments”. And he exemplified with Amazon: “What would the Chilean IRS would have said when Amazon began offering free shipping in two days to its prime customers, knowing that it generated a loss in each transaction? The tax authority would probably have rejected FEDEX spending and Amazon would not have prospered in Chile. ”

He also said the Tax Modernization project would significantly change the requirements for deduction of expenses, in line with respecting this freedom for business judgments. He added that although, various interpretations of the Chilean IRS offices and circulars already adopt an interpretive position similar to the one at the project, legislating in this regard would allow greater stability in interpretation, standardize audit criteria and contribute to legal certainty. He also hinted that the wording of some articles was questionable and that in others, the rule was not clear.

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