Through Official Letter No. 1279-2021, the Internal Revenue Service ruled on the taxation that affects in Chile a person with tax residence in the country who participates in an investment vehicle incorporated in Canada (“limited partnership”), without personality legal and that is considered transparent for fiscal and tax purposes in that country.

In this regard, confirm the following:

i) The limited partnership is subject to the rules on “entities controlled abroad” (art. 41 G LIR).

ii) The income obtained by the limited partnership must be recognized in Chile only on a liquid basis received, unless the rules on permanent establishment (art. 41 B of the LIR) or of entities controlled abroad (art. 41 G of the LIR).

iii) Once the income is received by the partner or participant of the limited partnership, its taxation must be determined in consideration of the type of income received (eg: dividends, interest, capital gains) and the Agreement to Avoid Double Taxation signed between Chile and Canada ( if applicable).

iv) Tax paid in Canada may be deducted from the tax payable in Chile (credit), as long as the requirements established in art. 41 A of the LIR. It does not prevent the above from the income being received in Chile, and therefore being taxed in the country, in a year after the payment of taxes abroad.