When the heart rules the head

In February 2016, Chile passed legislation that sought to quell the doubters of its controversial tax reform, which aimed to raise enough government revenue to fund an overhaul of the education system. But two years after the shake-up was first announced, tax lawyers remained as unconvinced as ever. For many, the tax reform is the result of politicians becoming so passionate about their cause, their methods lost all reason. At a roundtable event held by Latin Lawyer in Santiago, lawyers voiced their fears about the new, complicated dual structure born out of a tumultuous legislative process and the effect of lingering uncertainty on precious foreign investment at a time when Chile needs it most. Lulu Rumsey reports

“At the end of the day, there is nothing worse in life than when you fall in love with your own ideas,” says Sebastián Guerrero, of Santiago tax boutique Guerrero Valle Garcés. “You don’t listen to anyone who tells you your idea is not a good one – and that is exactly what happened here,” he continues, reflecting on the tense and largely unfruitful negotiations surrounding Chile’s controversial tax reform, which underwent further amendments in February after being passed in 2014. Chile’s largest ever shake-up of its tax regime sought to target income inequality by closing loopholes and tightening corporate tax deferral rules. However, the implementation of a complicated dual tax system and the strong ideological overtones that accompanied the reform’s uneasy passage through Congress have created a level of investor uncertainty that has provoked the ire of the country’s lawyers. They say the reform threatens economic growth at a time when plummeting commodities prices and waning interest from China mean Chile can ill afford to rock the boat. “A lot of investment was pushed back in 2015,” states Juan Pablo Schwencke of Aninat Schwencke & Cia. “Combine a dramatic change to the whole tax system with commodity prices going down, and you put together a perfect storm.”

Events

Events

Latin Lawyer 4th Annual Labour & Employment Conference

Events

Latin Lawyer 8th Annual Private Equity Conference

Insight

Reference

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Construction 2017

Chile

Alfonso Reymond Larraín and Rodrigo Riquelme Yanez

Reymond & Cía

Brazil

Fernando Marcondes, Ricardo Medina Salla, Marlon Shigueru Ushiro Ieiri, Adriana Regina Sarra de Deus and Juliana Yumi Shiina Morato

LO Baptista

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Guides

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The Guide to Infrastructure and Energy Investment

How to Build Up a Region: Development Banks and Multilateral Financing

Thomas Hechl and Vanessa Pinto Villa

Hogan Lovells LLP

The Role of Project Finance in Developing a Region: Trends and Considerations

Andrés Arnaldos Montaner , Daniel D Bartfeld , Jaime E Ramirez and Roland Estevez

Milbank, Tweed, Hadley & McCloy LLP
All Guides