Who will be able to use the Simplified Accounting System?
The SII (Internal Revenue Service) Commissioner, when listing those who will be able to use the Simplified Accounting System, explained that the law has set forth the following requirements:
· They must be individual business people or Individual Limited Responsibility Companies (EIRL).
· They must be VAT taxpayers.
· They must not be involved in any business activity described in Article 20, number 1 (real estate income) and 2 (non-fixed asset capital income), of the Income Tax Law, except for those activities that are necessary for the development of their principal activity.
· They must neither have or exploit, under any title, company rights or company shares, or form part of affiliation contracts or participation accounts as representatives.
· Their annual average income from their principal activity must not exceed 3,000 UTM (Monthly Tributary Units) in the last three years. To this end, every monthly income will be expressed in UTM, according to the value of the UTM corresponding to each respective month.
· If it is the first year of their operations, the MIPYME (SME) must have a capital not exceeding 6,000 UTM, according to the value of the UTM for the month the Notice of Initiation of Activity was presented.
Advantages of the Simplified Accounting System
Some of the advantages for the taxpayer provided in the new article 14 of the Income Tax Law include the elimination of some tax obligations that form part of the full form of accounting: keeping accounting books, preparing balances, applying monetary adjustments, applying depreciation, performing inventarization, preparing FUT records, immediate deduction of investments and inventories, among other benefits.
Additionally, the new legal body establishes the PPM (Provisional Monthly Payment) at 0,25% of gross monthly sales. This would reduce the financial costs of those taxpayers who, at present, pay PPM for a first category tax valued at 17% and then request the reimbursement from the State, given that their personal tax rate is generally lower.
Taxpayers will be able to opt for this simplified tax system and to maintain records through the MIPYME page in the SII virtual office or they could keep the traditional systems associated with earnings and expenses records in an accounting book.
Simplified Accounting system in the MIPYME Tax Portal
One of the most remarkable aspects of this system is that taxpayers who choose simplified accounting, starting on March 15 will be able to take advantage of a free application at the MIPYME Portal (www.portalmipyme.cl) that will allow them to comply with their tax obligations established in Law 20,170 in an easy and convenient manner. To do this, the taxpayers must register at the MIPYME Portal, and comply with the Portal requirements, which is to say that they must be eligible for the simplified tax regime, they must have a digital certificate and they must register at the same portal as an electronic invoice issuer.
The use of the Simplified Accounting System of the MIPYME Tax Portal will give the taxpayers added advantages as compared to those who do not use this tool, not only from the tax and business management perspective, but also from the point of view of a specific possibility of filing VAT declarations and payments on the 12th to 20th of each month.
In reference to the above, the Commissioner emphasized that in terms of business management the following options are made available:
· The electronically issued and received documents remain directly registered in the accounting system, and other transactions that do not have tax associated documents (for example, salary stubs, fee payment invoices, interest payments, etc.) are input directly into the system.
· The system automatically constructs records of earnings and expenses.
· The taxable base of the First Category Tax is calculated automatically, from the difference between the earnings and expenses registered in the accounting system.
· The system will generate a Monthly VAT Return proposal (Form 29) and an Annual Income Tax Return proposal (Form 22).
· The system will facilitate the preparation of the Sworn Income Declarations (1827 and 1887) and Wages (1879).
Additionally, the Commissioner indicated that these taxpayers will be able to show their cash flows and tax returns included in the MIPYME Tax Portal System to third parties such as suppliers, financial and business promotion institutions, facilitating their access to different financing instruments.
