IRS sets new format and mechanism for Annual Affidavit on Trusts
Article 14 letter E of the Chilean Income Tax Law, which entered into force in 2017, establishes that people who have or acquire the quality of constituent or settlor, beneficiary, trustee or administrator of a trust created under foreign law provisions must inform the Internal Revenue Service (the «IRS») of a series of information each year.
The content and scope of these information duties are established in Exempt Resolution N° 46, issued by the IRS on May 18, 2018, through which the Annual Affidavit on Trusts was created.
This declaration must be presented by Chilean taxpayers who have or acquire in the corresponding calendar year the quality of:
- a) Constituent or settlor of a trust;
- b) Beneficiary of a trust, provided that they are exercising the status of beneficiaries, and who have become aware of said quality, even when they are not enjoying the benefits due to the non-fulfillment of the term, condition or modality established in the corresponding act. or contract, or
- c) Trustee or administrator of a trust.
Likewise, they must report the revocation or termination of a trust in which they have held any of the qualities indicated above.
The deadline for submission of this affidavit expires on June 30 of the year following the calendar year in which the taxpayers have acquired or have the status of constituent or settlor, trustee or administrator of a trust; or June 30 of the year following the calendar year in which a previously informed trust is revoked or terminated, as applicable.
In case of delay or omission in the presentation of this statement or an incomplete or erroneous presentation there is a fine of ten annual tax units, increased as established in article 14 letter E number 3 of the Income Tax Law. In addition, in the event that the declaration is not presented, it will be presumed, unless there is proof to the contrary, that the incorporation of the trust constitutes abuse or simulation.
The obligation to present the affidavit in writing is valid as of the Fiscal Year 2018, and refers to the information on trusts that are in force or have been in force from January 1, 2017, or those that have been modified or revoked from that date onwards, as applicable.
Josefina Rochette, associate of Baraona Marshall & Cia..