Global Tax 50 2014: Alberto Arenas

Alberto Arenas is a new entry this year

The mastermind behind Chile's most ambitious tax reforms for 30 years is finance minister Alberto Arenas, who believes the changes he is implementing will bring "stability and sustainability" to the South American nation. Already responsible for sweeping reforms of the pension system to provide a minimum level of income during his time as the Director for the Budget during the Socialist Party's last period in power between 2006 and 2010, President Michelle Bachelet chose Arenas to step up to lead the Ministeiro de Hacienda .

After being sworn in along with the rest of the new Cabinet on March 23 he took just nine days to submit his eye-catching tax reform Bill to Parliament on April 1.

The Bill bucked the global trend of making tax systems more competitive and instead raised several taxes, including the headline rate of corporate tax which will reach 27% by 2017, up from 20%, with the effective tax rate even higher.

After the Bill had been discussed by the government and the senate, an official version was released with no fewer than 278 modifications to the original – a mark of the intense discussion it had provoked and improvements it had undergone.

A key addition to the Bill was the introduction of two corporate tax systems for taxpayers to choose between: an attributed profits system, as proposed in the original Bill, and a new, partially integrated tax system.

Additionally, a general anti-avoidance rule (GAAR) has been implemented and there are a number of indirect tax changes, mainly environmental in nature.

Of these, the new carbon tax will likely affect taxpayers the most, and a tax of $5 per tonne of CO ₂ emitted will also have businesses reminding themselves to turn the lights off as they leave the office at night.