The proportional VAT fiscal credit recovery based on a pro rata system, enacted in the article 23 No 3, D.L 825 from 1974, Tax Law on Sales and Services (hereinafter called LIVS), whose calculation is enacted in the article 43, D.S 55 from 1977, allows taxpayers who generate taxable sales or services and exempt or untaxed sales or services, recovering some part of the tax credit mentioned in the article 23 of the law in question, if this is of common use. While pro rata mentioned in D.S 55, is a mixture of the real allocation system and the approximate allocation system, several laws regulate this subject through other ways, such as partial pro rata and permanent setting (similar to the one used in Chile until 1977). There are no arguments or records that justify our pro rata method.
As of the publication of the Law 20.780 in 2014, which modified the concept of sale of real estate properties, and its subsequent modification through the Law 20.899 in 2016, property development companies shall perform the proportionality stated by tax exemptions, and non-taxed facts established in the transitional articles 6 and 7 of the Law 20.780, as well as the new exemptions of article 12 from LIVS.
Keywords:
VAT, fiscal credit, proportionality, sales, real estate properties, exemptions
Escalona Caba, E. (2016). Theoretical and practical analysis of the proportional tax credit pro rata system. Effects on the real estate industry. Revista De Estudios Tributarios, (15), pág. 73–100. Retrieved from https://anuariocdh.uchile.cl/index.php/RET/article/view/43209
