Rich Deducting Groceries in Chile Target of Bachelet Plan: Taxes
Rich Deducting Groceries in Chile Target of Bachelet Plan: Taxes
By Eduardo Thomson Apr 13, 2014 11:00 PM CT
Writing off groceries as a corporate expense, a common practice among Chile’s wealthy, will get harder as the government moves to clamp down on tax avoidance to raise revenue needed to pay for social programs.
The month-old administration of President Michelle Bachelet plans to employ 500 more tax inspectors, who will be empowered to review every credit-card expense to see if it is business related. Supermarket spending claimed as a tax deduction will be rejected out of hand, though people can appeal. Tax disputes will go to special courts, eliminating the more informal chats with officials where disagreements now are resolved.
The measures are part of a package of tax changes presented to legislators that aim to raise 3 percent of gross domestic product to finance Bachelet’s election pledges, including free education for all. Approval is expected later this year, with Bachelet’s ruling coalition having a majority in both chambers of the Chilean Congress.
Some tax advisers say the proposals are too draconian for a country with the lowest tax evasion in Latin America, and will lead to an increase in disputes as tax bills mount. Advisers themselves risk fines if regulators deem they’re helping clients avoid taxes.
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http://www.bloomberg.com/news/2014-04-14/rich-deducting-groceries-in-chile-target-of-bachelet-plan-taxes.html