[BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS IN CHILE] 28
companies. This prohibition also applies to individuals who are parties to insolvency proceedings in the capacity as debtor or as administrators or representatives of debtors in insolvency proceedings. V- Cross-border insolvency The Law provides a chapter on cross-border insolvency rules, promoting cooperation and recognition of foreign proceedings, protecting the rights of both national and overseas creditors. The law also regulates the effects of parallel proceedings. VI- Tax aspects For tax purposes, the liquidator represents the debtor before de Chilean Tax Authority. As such, the liquidator is responsible for handling the debtor´s tax obligations (tax returns, sworn statements, invoice issuance, withholdings, etc.). Regarding tax offenses, the liquidator might be liable if there is participation in fraudulent acts committed during its administration. During a liquidation proceeding, the Tax Authority may issue a tax assessment on taxes owed by the debtor, without any prior procedure or notice. Additionally, any amount waived or condoned by a creditor from debts included in a judicial reorganization agreement, is treated, on one hand, as a deductible expense for the creditor, and on the other, as a taxable income for the debtor. However, credits must be at least one year old and independent to any related parties. Creditors who issued unpaid invoices to debtors may choose to either allocate the VAT paid for such invoices to any taxes due or request its reimbursement. This benefit is also limited to unrelated creditors and debtors.
08 Fall
ILN Restructuring & Insolvency Group – Bankruptcy, Insolvency & Rehabilitation Series
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