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Tax on employment income, which for resident or domiciled individuals is the second category tax and for other individuals is the flat 20% tax, is collected entirely by means of withholding and is a final tax on that income.
Taxpayers who have income subject to the complementary tax must file a return in April of the year following that in which the income was received or accrued and pay the tax at the same time. Basically, a self-assessment system applies. Independent consultants who are liable for complementary tax must pay each month an amount equal to 10% of the fees received in the previous month as a payment on their final liability. If the consultant's client is a company, however, the company must withhold this 10% tax.
Individuals who have only employment income do not have to file income tax returns unless they receive employment income from more than one employer. In that case, they must file a return, monthly or yearly, as they choose, showing their aggregate employment income to ensure that they pay the correct amount of second category tax.
The information in this article was correct as of 9 July 1996.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
For further information contact Anthony Cook, Deloitte & Touche, Santiago, Chile on Tel: +56 2 638 4186, Fax: +56 2 639 1522.
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