Personal Income Tax Rates

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ghibli
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Joined: Mon Jan 30, 2017 2:18 pm

Re: Personal Income Tax Rates

Post by ghibli » Sun Apr 01, 2018 6:43 pm

Thanks paladin. So, I am supposing that form 22 is for individuals to file a tax return. I did not find that form on the SII website, or even reference to that form. You are right. It is very ambiguous. I have reached the three year time limit and will be paying for the first time. As I said before, all my income is from outside of chile. It's not complicated except that the SII website is so confusing. Perhaps I need a tax accountant to get set for the first year. Can you tell me what is the due date? Thanks again.

Ramana66
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Posts: 14
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Re: Personal Income Tax Rates

Post by Ramana66 » Mon Apr 02, 2018 4:25 pm

Thanks a lot for the help.

Just couple of questions

1. as the UF changes daily, what do you use to calculate the tax?
2. As the rates are showing monthly, what happens if some one is only employed partly in that year (starting employment in mid year, or finished mid year)?
3. Due to monthly rates, does this means someone earning equivalent of say US$ 3500 a month for 6 months (so a total US$ 21,000 in that tax year will be taxed at same rates as someone who earned US$ 42,000 - 3500 X 12 months in that tax year). Did I misunderstood/missing something or is it complex?

I will try to build an example to include all bands of tax for employed and upload as a spreadsheet (if it is allowed to share here) for any corrections and use for future reference to anyone.

If it is allowed may be someone can do same for self employed (I am not sure of rules for self employed) for future reference of other members. Just a suggestion.

Many thanks to all once again for all inputs.

paladin
Rank: Chile Forum Citizen
Posts: 493
Joined: Tue Dec 28, 2010 3:32 pm

Re: Personal Income Tax Rates

Post by paladin » Mon Apr 02, 2018 8:08 pm

ghibli wrote:
Sun Apr 01, 2018 6:43 pm
Thanks paladin. So, I am supposing that form 22 is for individuals to file a tax return. I did not find that form on the SII website, or even reference to that form. You are right. It is very ambiguous. I have reached the three year time limit and will be paying for the first time. As I said before, all my income is from outside of chile. It's not complicated except that the SII website is so confusing. Perhaps I need a tax accountant to get set for the first year. Can you tell me what is the due date? Thanks again.

Use this link to get to where you will find the online f22. Yes, it’s what individuals use
your income from outside Chile should be converted into uf on the date each amount was received.
you have until 30 April to submit your f22. If you find you dont have all the info by then to properly complete the declaration, you should submit it with whatever you have, and then later you can submit a corrected one. I’m not sure of the deadline, but think it’s June/ July.
I would suggest you get a tax accountant to help the first time around. After that, you shiuld have no problem in doing it yourself.

http://www.sii.cl/servicios_online/1044-.html

paladin
Rank: Chile Forum Citizen
Posts: 493
Joined: Tue Dec 28, 2010 3:32 pm

Re: Personal Income Tax Rates

Post by paladin » Mon Apr 02, 2018 8:20 pm

Ramana66 wrote:
Mon Apr 02, 2018 4:25 pm
Thanks a lot for the help.

Just couple of questions

1. as the UF changes daily, what do you use to calculate the tax?
2. As the rates are showing monthly, what happens if some one is only employed partly in that year (starting employment in mid year, or finished mid year)?
3. Due to monthly rates, does this means someone earning equivalent of say US$ 3500 a month for 6 months (so a total US$ 21,000 in that tax year will be taxed at same rates as someone who earned US$ 42,000 - 3500 X 12 months in that tax year). Did I misunderstood/missing something or is it complex?

I will try to build an example to include all bands of tax for employed and upload as a spreadsheet (if it is allowed to share here) for any corrections and use for future reference to anyone.

If it is allowed may be someone can do same for self employed (I am not sure of rules for self employed) for future reference of other members. Just a suggestion.

Many thanks to all once again for all inputs.

It’s up to you if you want to set up a spreadsheet, but the f22 will calculate it correctly for you anywsy.
You are taxed on your total income for the year, regardless of how long you have been here. That’s fair, as the more you earn, the more you pay. So your first 13.5 uta will be tax free , not matter how much you earn. It doesnt matter whether you are employed or self employed, except that those whose income arises from honorarios have the 30% deduction up to max 15uta in lieu of keeping records of expenses. This is logical, as it’s assumed that you will imcur expenses in earning those honorarios, whereas an employee doesnt.

Ramana66
Rank: Chile Forum Tourist
Posts: 14
Joined: Fri Dec 01, 2017 9:09 am

Re: Personal Income Tax Rates

Post by Ramana66 » Tue Apr 03, 2018 3:55 pm

paladin wrote:
Mon Apr 02, 2018 8:20 pm
Ramana66 wrote:
Mon Apr 02, 2018 4:25 pm
Thanks a lot for the help.

Just couple of questions

1. as the UF changes daily, what do you use to calculate the tax?
2. As the rates are showing monthly, what happens if some one is only employed partly in that year (starting employment in mid year, or finished mid year)?
3. Due to monthly rates, does this means someone earning equivalent of say US$ 3500 a month for 6 months (so a total US$ 21,000 in that tax year will be taxed at same rates as someone who earned US$ 42,000 - 3500 X 12 months in that tax year). Did I misunderstood/missing something or is it complex?

I will try to build an example to include all bands of tax for employed and upload as a spreadsheet (if it is allowed to share here) for any corrections and use for future reference to anyone.

If it is allowed may be someone can do same for self employed (I am not sure of rules for self employed) for future reference of other members. Just a suggestion.

Many thanks to all once again for all inputs.

It’s up to you if you want to set up a spreadsheet, but the f22 will calculate it correctly for you anywsy.
You are taxed on your total income for the year, regardless of how long you have been here. That’s fair, as the more you earn, the more you pay. So your first 13.5 uta will be tax free , not matter how much you earn. It doesnt matter whether you are employed or self employed, except that those whose income arises from honorarios have the 30% deduction up to max 15uta in lieu of keeping records of expenses. This is logical, as it’s assumed that you will imcur expenses in earning those honorarios, whereas an employee doesnt.
Thanks a lot @Paladin. I am moving to Chile next month, so at this point, I won't be able to access the F22 form. I am just trying to make some simple calculations to see what my tax liability would be. I am trying to estimate my net monthly salary after all the deductions (social, medical, etc.) and taxes to see some budget plans.

Another question regarding the "Cantidad a rebajar" (Amount to be reduced) shown in below link on SII, would the system deduct all the amounts shown in the table? Or only the highest one based on your monthly salary?

For an example, a person earning a monthly salary (after health insurance and pension) of CLP 3,288,040 (70 UTM, at 13.5% tax rate) what would be the monthly deductions to be considered to arrive at taxable salary?

A) Is it just CLP 210,904.28 shown against this tax band (13.5% tax rate = earning 70 UTM) or
B) Is it a sum of all the bands until this tax band = CLP 318,000.44 (sum of 25,364.88 + 81,731.28 + 210,904.28).

Sorry if this is too detailed query.

Anyway, I will contact an accountant for first year tax filing (if required), but I thought I will get my basics right :D

Once again thanks a lot for all your help.

Jaggg
Rank: Chile Forum Tourist
Posts: 8
Joined: Tue Jul 19, 2016 4:42 pm

Re: Personal Income Tax Rates

Post by Jaggg » Sat Jul 21, 2018 2:11 pm

I think you're overcomplicating. Tax rate is not at all difficult to calculate (and is indeed very low for workers), the SII calculate the "renta imponible" for you (money which is taxed) and then they also calculate how much you have to pay which for like 75% of workers is 0 or negative.

Is calculated like this, if your renta imponible is 30.000.000 in 2017 (2.5 million monthly) you multiply it by 0,135, which adds to 4.050.000, then you discount the cantidad a rebajar, which in this case is 2530851,36, so then your total tax bill is 1.519.149, so you have a 5% effective tax bill (not even counting that your renta imponible may be lower than your actual earnings if you save in APV, work independent, be paying a home or education).

Anyway, i don't think you need to hire an accountant, the SII (the tax agency) is pretty good at explaining it all in spanish (source: http://www.sii.cl/destacados/renta/2018 ... ica018.pdf) and they do like 99% of the work for you if you're just earning money in Chile, you just have to click "Acepto esta declaración de renta" once a year.

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Space Cat
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Location: Valdivia

Re: Personal Income Tax Rates

Post by Space Cat » Sun Jul 22, 2018 12:58 am

Jaggg wrote:
Sat Jul 21, 2018 2:11 pm
I think you're overcomplicating. Tax rate is not at all difficult to calculate (and is indeed very low for workers), the SII calculate the "renta imponible" for you (money which is taxed) and then they also calculate how much you have to pay which for like 75% of workers is 0 or negative.

Is calculated like this, if your renta imponible is 30.000.000 in 2017 (2.5 million monthly) you multiply it by 0,135, which adds to 4.050.000, then you discount the cantidad a rebajar, which in this case is 2530851,36, so then your total tax bill is 1.519.149, so you have a 5% effective tax bill (not even counting that your renta imponible may be lower than your actual earnings if you save in APV, work independent, be paying a home or education).

Anyway, i don't think you need to hire an accountant, the SII (the tax agency) is pretty good at explaining it all in spanish (source: http://www.sii.cl/destacados/renta/2018 ... ica018.pdf) and they do like 99% of the work for you if you're just earning money in Chile, you just have to click "Acepto esta declaración de renta" once a year.
Oh, I thought that "cantidad a rebajar" is subtracted from the income before multiplying. If it's a tax reduction then it's just awesome.

Skal
Posts: 1
Joined: Sun Jul 22, 2018 1:43 am

Re: Personal Income Tax Rates

Post by Skal » Sun Jul 22, 2018 2:51 am

Hi! maybe you already know this maybe you don't... but I figured I'd take the time to explain this since there seems to be some confusion...

It really isn't complicated at all, "Cantidad a Rebajar" isn't a Tax Reduction... is just the way they construct the table so it's easier to calculate at a glance how much you have to pay.

It amounts to the total Tax you have to pay for all Tax brackets below the one you fall into...

So to explain using the table in page 12 of the document Jaggg linked to:

If you make $ 30.000.000 a year you'd calculate:

0 to 7.609.464 -> 0% Tax -> $ 0 Tax
7.809.465 to 16.909.720 -> 4% Tax -> $ 372.018 Tax
16.909.721 to 28.183.200 -> 8% Tax -> $ 901.862 Tax
28.182.201 to 30.000.000 -> 13,5% Tax -> $ 245.268 Tax For a total of $ 1.519.149

To avoid all this hassle, the SII calculates "Cantidad a Rebajar" so that you can simply do: 30.000.000 x 13,5% - Cantidad a Rebajar for the bracket:

$ 30.000.000 x 13,5% - $2.530.851 = $ 1.519.149 and you get the same result.

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Space Cat
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Re: Personal Income Tax Rates

Post by Space Cat » Sun Jul 22, 2018 11:59 am

Thank you, I just don't know the proper English term for it. 😅

In my case it's $30.000.000 x 70% (but not more than ~$8.531.280 of "gastos presuntos" for honorario) x 8% (because it's now less than 28m) — $901.862 = $815.635.

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