Issue#2October 2014www.inpactint.com

UruguayUruguayUruguayUruguayUruguayUruguay

ChileChileChileChileChileChile

EcuadorEcuadorEcuadorEcuadorEcuadorEcuador

PanamaPanamaPanamaPanamaPanamaPanamaPanamaPanamaPanamaPanamaPanamaPanama

INPAC TINPAC TINPAC TINPAC TINPAC TINPAC Tin...in...in...in...in...in...

Latin AmericaLatin AmericaLatin AmericaLatin AmericaLatin AmericaLatin America

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INPACT Latin AmericaFor more than a decade, INPACT has extended into Latin America, allowing accounting fi rms across the continent to connect, offer support to each other and grow their international presence. INPACT representation has increased to 9 fi rms that are spread across the region Latin America’s huge landmass. Marcelo Berge is currently the Board representative overseeing and supporting the INPACT members in Latin America.

With members in Paraguay, Argentina, Bolivia, Chile, Ecuador, Panama, Guatemala, Peru and Uruguay, INPACT is growing every year and continues to offer a plethora of benefi ts to each and every member. These fi rms have shown a tremendous amount of collaboration by means of sharing resources, networking and training.

Recently, our member in Brazil resigned, but there are two prospective members in this important country. They are also prospective members in Venezuela, Costa Rica, and Colombia.

INPACT Meetings in Latin America

The Latin American fi rms meet once a year near the offi ces of one of the member fi rms. The location rotates to a new country every year. Most recently, there was a meeting on August 6th and 7th in Peru.

In addition to the yearly meetings, INPACT Latin America holds conference calls every two months to provide the fi rms with any new industry information and ensure that everyone stays in the loop within the organisation.

INPACT in...

Marcelo BergePartner at Berge Vazquez y AsociadosArgentina, Buenos Aires

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Continent-wide Collaboration

One of the great benefi ts of being a part of INPACT is that the member fi rms have the ability to reach out to fi rms in other countries and ask for advice or provide referrals. For instance, most recently, Berge Vazquez & Asociados, which is located in Argentina, was able to offer experienced advice on the topic of transfer pricing, which has been mandatory in Argentina since 1999 and is only beginning to take effect in other South American countries with the exception of Brazil.

In addition, the Latin American members have started to develop a joint marketing strategy using social networks and the internet. This level of support and collaboration is diffi cult to fi nd in other accountancy organisations, so we are glad that the member fi rms that make up INPACT Latin America are so dedicated and are taking advantage of what other fi rms within our organisation can provide.

INPACT in...

Marcelo Berge

We thank our guest editor of this Issue of INPACT In... Latin America, Marcelo Berge, partner at Berge Vazquez y Asociados and Board Member at INPACT International.

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LATESTNEWS

Raul BermudezPartner at Bermudez & AsociadosPanama, Panama

Bermúdez & Asociados Receives Accountancy Firm of the Year Award

Acting as an accounting fi rm that provides benefi cial and long-lasting business relationships with clients, Bermúdez & Asociados has been in business for eight years and has just recently received the Corporate Finance Accountancy of the Year award in Panama. The fi nancial magazine, Corporate INTL, gives out this award annually, and, this year, Bermúdez & Asociados was the recipient.

Though tens of thousands of fi rms were nominated and considered for this prestigious award, Bermúdez & Asociados was chosen on account of the fact that, in the last 12 months especially, the fi rm has been highly dedicated to providing personal services to clients and has experienced a tremendous amount of growth.

“For the whole team that makes our fi rm has been a great satisfaction to have been honored with this award which has contributed signifi cantly

to improving the image of our fi rm to our customers, other fi rms in the country and the general public. We consider this as a reward to the efforts of every staff of our fi rm in trying to provide a professional and dedicated service of the highest quality, regardless of the size of our customers, which we believe has been the main key to this awards.

We hope to continue to grow professionally as fi rm and become recognized within the local market of accounting fi rms.”

Raul Bermudez

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LATEST NEWS

Additional Characteristics that Qualifi ed the Firm for the Award

In order to qualify for the award, the fi rm had to submit a list of key clients and notable work that it contributed to in the past year. In addition, the following facts contributed to Bermúdez & Asoiciados’ receipt of this award:

• The fi rm participated in revising and advising the fi nancial business strategies for companies across Panama

• Their website traffi c and the website traffi c of their clients has increased signifi cantly over the past year

• The fi rm has contributed dramatically to the public domain in regard to accounting, marketing and business management information

• Their promise to improve their clients’ business management strategies has successfully come to fruition on numerous and notable occasions

• The fi rm’s is involved on an international level, namely with its membership with INPACT

The award results will be published by Corporate INTL and will be circulated to their 70,000 readers in the awards publication edition this year.

The Future Looks Bright for Bermúdez & Asociados

The Corporate Finance Accountancy of the Year award was the fi rst award of its kind to be given to Bermúdez & Asociados. However, they have high hopes that receiving this award will boost their presence in professional environments and will improve the image of the fi rm in the eyes of current and future clients. Bermúdez & Asociados suspects that this will be the fi rst of many awards.

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People residing or domiciled in Chile are subject to a tax on their income regardless of the source. The income may originate inside the country or abroad. On the other hand, people without a domicile or residence in Chile are only subject to tax on their income originated in the country.

Income tax in Chile is founded on three basic principles:

1. Taxable subjects must be, ultimately, the individuals; whereas the taxes paid by the companies are only on account of the fi nal taxes payable by their owners (integrated system).

2. The taxable base must be comprised of the set of incomes received or accrued by the company during the tax period. This is called the Global Income principle.

3. The owners or partners in companies, whether they are resident or not, only pay taxes once they withdraw their profi ts. If the make any withdrawals or distribution of dividends, the taxation is suspended until such circumstances occur.

The First Category Tax (Business Tax)

The First Category Tax levies the taxable profi ts of businesses, affecting the revenues from the principal and from commercial, industrial, mining and other companies.

Tax is determined on the basis of the net profi ts earned by the company, that is, over the accrued revenues received minus the expenses, and is reported annually in the month of April of each year for all those revenues accrued or received during the previous year.

With regard to certain activities (agriculture, mining and transport), the taxpayer may pay the tax as per a presumptive income system, as long as the conditions that form by the law are met.

The First Category Tax paid by the company is deducted as a credit, in accordance with the mechanism set in place for the preparation of Taxable Profi t Fund, of the Global Supplementary or Additional Tax which the owners, partners or shareholders in the companies or partnerships are subject to pay for the profi ts withdrawn (in cash or in kind) or for the dividends distributed.

The current rate of the fi rst category tax is 20%.

Victor MancillaPartner at ConsatChile, SantiagoTaxes in Chile

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LATEST NEWS

Global Supplementary Tax (tax applicable to resident physical persons).

The Global Supplementary Tax is a personal, global, progressive and supplementary tax determined and paid once a year by individuals domiciled or residing in Chile over the taxable income determined in accordance with the norms applicable to fi rst and second category. It is applicable to the taxpayers whose net global income exceeds 13.5 UTA. (US$12,000). The rate increases progressively as the taxable base grows. It is applied, charged and paid annually. Its current marginal rate is 40%. However, the law contemplates some mechanisms that encourage people to save and resorting to those mechanisms makes it possible to reduce the amount of the taxes payable.

Additional Tax (tax applicable to nonresidents)

The Additional Tax is applicable to individuals or legal entities who neither reside or have a domicile in Chile. The general rate is 35% and generally operates on the basis of withdrawals and distributions or remittances sent outside the country, but originating in Chile.

These revenues are accrued in the year in which they are withdrawn or distributed by the company and remitted abroad. The taxpayers subject to this tax are entitled to a credit equivalent to the First Category Tax paid by the company over the revenues withdrawn or distributed.

A Tax Reform bill submitted by the Executive in order to fi nance changes in the Chilean educational system is undergoing analysis and awaiting voting in Parliament. The main changes that will affect taxation in our country are the following:

Type of Tax Current System As per the Tax ReformTaxes to companies The fi rst category tax rate is 20%

and taxation is performed on an ac-crual basis.

2 tax systems are established: attributed revenue and partially integrated, with rates of 25% and 27%, respectively.The rise in the fi rst category tax rate will be gradual in both systems. In 2014 it will grow up to 21%, to 22.5% in 2015 and to 24% in 2016. In 2017 the new schemes will become in force, with a fi nal rate of 25% for the attributed revenue and 25.5% for the partially integrated one. Lastly, in 2018 this last mentioned model reaches its fi nal rate of 27%.

Taxes to individuals The second category tax or global supplementary tax has a minimum rate of 40% and the taxation system is on a received basis. If the income originated in a company, the individual may deduct from his global supplementary tax the entire fi rst category tax paid by the company.

The maximum tax rate applicable to individuals drops to 35%.If the income originated in a company subject to the attributed revenue system, the fi rm already paid on behalf of the owner or partner. If the company was in a partially integrated system, the individual pays taxes for the dividends received and withdrawals of profi ts, but only 65% of the tax paid in the fi rst category by the company may be deducted from his global supplementary tax.

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LATEST NEWS

Recap of the INPACT Meeting in Latin America

Last month, on August 7th and 8th, there was a meeting for all the INPACT members in Latin America. Accountancy fi rms from Uruguay, Paraguay, Chile, Peru, Ecuador, Guatemala, and Panama attended the meeting this year, which was held in Lima, Peru.

The INPACT Latin America group holds informal meetings yearly in one of the members’ countries of origin. Throughout the year, however, the nine fi rms have conference calls every two months to get an update on the current accountancy news and check in with the growth and progress each fi rm has.

Highlights of this Year’s Meeting

All INPACT meetings are characterized by excellent collaboration and group learning, but, this year, the Latin American fi rms really focused on the recent success of the cooperation between the fi rms in Argentina and Chile. Because transfer pricing has existed in Argentina since 1999 and other Latin American countries are only beginning to adopt it, the members of the fi rm from Argentina, Berge Vazquez & Asociados, shared their experience with the others at the meeting.

In addition, the Latin American fi rms discussed the benefi ts of using the INPACT marketing tools to improve the rate of growth and expand each fi rm’s presence in its own country and abroad. By using common marketing and the tools INPACT provided, the fi rms expect to reach for more national and international recognition in the coming year.

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LATEST NEWS

Looking Forward and Future Meetings

INPACT encourages all the member fi rms to attend the regular meetings in their region because it fosters collaboration, cooperation, and overall growth. INPACT’s goal has always been to improve each fi rm’s capacity to reach out to a global community and have a lengthy list of experts and partners to call upon for consultation and resources.

The Latin American fi rms are already looking forward to the 2015 meeting, though the location of the meeting has not yet been decided.

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MEMBER DIRECTORY

Company Name: Berge Vazquez y AsociadosAddress: Maipú 872 - 3° fl oor “C” and “D” offi cesC1006ACL Buenos Aires Contact Partner: Mr. Marcelo BergeTelephone: +54.11.4314.4363Email: mberge@bergevazquez.com.arWebsite: www.bergevazquez.co.ar

Company Name: Barea Vargas & AsociadosAddress: AV. Arce N 2355 Edifi cio Cobija Piso 2 Ofi cina 202 La Paz 13882Contact Partner: Mr. Ruben VilchesTelephone: +591.022445567 Email: bareavar@entelnet.boWebsite: www.bareavargasasociados.blogspot.com

Company Name: Batallas & Batallas AuditoresAddress: Calle B, 31 38 y San Gabriel. Tercer Piso Sector: Hospital Metropolitano, QuitoContact Partner: Mr. Augusto P BatallasTelephone: +593.22269100 Email: wbatallas@batallas.com.ecWebsite: www.batallas.com.ec

Company Name: CONSATAddress: José Antonio Soffi a 2747 Of. 404, Providencia, SantiagoContact Partner: Mr. Víctor MancillaTelephone: +56.2.2333.2780Email: vmancilla@consat.clWebsite: www.consat.cl

Company Name: MIBZAR CASTAÑÓN - CPAAddress: 7a. Avenida 7-78 zona 4.Edifi cio Centroamericano, 7o. Nivel. Ofi cina 703, GuatemalaContact Partner: Mr. Mibzar CastanonTelephone: +502.2334.1537 Email: mcastanoncpa@gmail.comWebsite: www.mcastanon.com

ARGENTINA

BOLIVIA

ECUADOR

CHILE

GUATEMALA

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MEMBER DIRECTORY

Company Name: Bermudez & AsociadosAddress: Via España, Edifi cio Analiza, Ofi cina 101 Apartado: 02091-0834 9A, PanamaContact Partner: Mr. Raul BermudezTelephone: +507.261.9339Email: rbermudez@bermudezyasociados.netWebsite: www.bermudezyasociados.net

Company Name: Consultora Alemana ParaguayaAddress: Molas Lopez Nro 2030 Sacramento 1170 Asuncion Contact Partner: Mr. Arnaldo H Acosta LeyesTelephone: +595.21.294.835 Email: informaciones@coalpa.com.pyWebsite: www.coalpa.com.py

Company Name: Vigo & AsociadosAddress: Av. Monsenor Roca y Bologna No 155 Urb San Antonio Mirafl ores, LimaContact Partner: Mr. Wencis Vigo SilvaTelephone: +51.14452855Email: vigoasociados@vigoasoc.comWebsite: www.vigoasoc.com

Company Name: MecauntAddress: Edifi cio Artigas, Calle Rincón Nº 487 Apto. 613, MontevideoContact Partner: Mr. Alberto RodriguezTelephone: +598.2915.7910Email: mecaunt@adinet.com.uyWebsite: www.mecaunt.com

PARAGUAY

PERU

URUGUAY

PANAMA

The content of this newsletter is of general interest and should not be regarded or relied upon as professional advice. For information about a speci� c matter, readers are advised to consult the appropriate professional. INPACT is an association of independent accounting � rms.

INPACT International,Tavistock House South, Tavistock Square,

London WC1H 9LG, United KingdomTel:+44 20 7387 4741, Fax: +44 20 7387 4715

E-mail: inpact@inpactint.com