New approach to ‘maintaining’ the tax basis on reorganisations involving Chilean assets

In late October 2024, the publication of Law No. 21,713 introduced measures aimed at strengthening tax compliance within the framework of the Chilean Pact for Economic Growth, Social Progress, and Fiscal Responsibility. Among other measures, it completely replaced Article 64 of the Chilean Tax Code, which governs the tax authority’s valuation powers (facultad de tasación) and the requirements for the application of tax-neutral reorganisation regimes. In March 2025, the Chilean Internal Revenue Service (SII) issued administrative instructions addressing this matter, through Circular Letter No. 23 of 2025.

Recently, in late January 2026, the SII issued administrative rulings that collectively revise the interpretative framework governing corporate reorganisations that involve Chilean assets (i.e., mergers, spin-offs, and other corporate reorganisations), on both local and cross-border transactions. These rulings outlined and further developed the position stated in previous instructions from the SII (i.e., Circular Letter No. 23 of 2025), particularly regarding the requirement of ‘maintaining’ the tax basis (costo tributario) of the Chilean assets in such transactions. Under this requirement, the SII’s new approach allows reorganisations to be made at values different from their tax basis, provided the recipient entity maintains a proper separate registration of the tax basis.

Under the former wording of the provision, the SII had a ‘stricter’ approach: if a taxpayer transferred Chilean assets at a value different from their tax basis, the SII was entitled to exercise its valuation powers to adjust the values of the transaction. This position primarily rested on the premise that contributions should respect the assets’ existing tax basis to prevent distortions in subsequent taxable events.

The 2026 rulings now emphasise that while the receiving entity must record the transferred Chilean assets at their tax basis, this does not prevent the transaction itself from being executed at a different value. Thus, the same passage is repeated through the rulings stating this approach: the operation may be carried out at fair market value or any other agreed value, as long as the tax basis is separately registered and maintained in the recipient entity.

However, in the SII’s words, for the above to be properly demonstrated, the tax basis of the Chilean assets being transferred must be expressly and unequivocally stated in the documentation that records the contribution or corresponding transaction and that supports the accounting records. Specifically, the SII mentions that the tax basis of the Chilean assets must be expressly indicated in the deed – or corresponding document according to foreign legislation – through which the transaction is carried out.

From a practical standpoint, this interpretation seems to incorporate a new formal requirement of expressly stating the Chilean tax basis of the transferred Chilean assets in the foreign corporate documentation governing the reorganisation, which is essential for the taxpayer to demonstrate the maintenance of the tax basis.

In practice, the above is more of a burden, especially in cross‑border contexts. Foreign legal frameworks and corporate governance standards do not typically require or necessarily accommodate the inclusion of a ‘jurisdiction‑specific tax basis figure’ in corporate instruments.

This requirement to disclose and formalise the Chilean tax basis within foreign corporate instruments may constitute an additional formal requirement and a barrier for taxpayers, as if such disclosure is incomplete or omitted, the taxpayer risks losing access to the reorganisation regime and becoming subject to potential assessment and adjustments by the SII.

In this sense, this interpretation may represent both a flexibility and a limitation. It modernises Chile’s reorganisation framework by recognising commercial realities, yet simultaneously seems to introduce a formal additional requirement that may operate as a limitation, especially in cross‑border reorganisations. How this balance plays out in practice will determine whether this interpretation ultimately enhances or restricts the effectiveness of Chile’s reorganisation regime, particularly with the incoming government seeking to open Chile’s economy and increase cross-border transactions.

Taxpayers should carefully monitor future pronouncements and criteria, as this is an evolving matter resulting from a relatively recent legal amendment and the related administrative guidelines are still under development and subject to interpretation by the SII. Particular attention should be paid to these issues when assessing or implementing corporate reorganisations involving the transfer of Chilean assets.