The tax exemption is a incentive available for companies that need training in Chile. The training of workers allows their professional development and that of their work to improve or agility in processes and learn new knowledge. However, financing and budgeting for training can be a headache for many companies. In Chile there is an incentive for this, known as the Sence Tax Franchise.
But, What is the Tax Exemption? It is a benefit granted by the State to companies that invest in the training and development of their workers. This is a mechanism that allows reduce the amount allocated to training activities during the current year from corporate income tax.
However, How is it requested? What requirements must the company meet? How is the process done? For all these doubts and more, we have prepared the following article with everything you need to know about the Tax Excess.
What is the objective of the tax exemption?
According to him National Training and Employment Service (Sence), the objective of the Tax Franchise is “encourage companies to invest in the human capital of their organizations, thus improving their productivity, competitiveness and quality”. In this way, training is necessary to develop and encourage workers' skills.
What companies can use the tax exemption?
All companies that declare income tax can access the tax exemption, as long as they meet the requirements established by law. Among these requirements are:
- Have initiation of activities before the Internal Revenue Service (SII).
- Carry out training activities authorized by the National Training and Employment Service (SENCE).
- Pay taxes in the 1st category of the Income Law.
- Have an annual payroll of taxable remuneration greater than 35 UTM.
- Have your collaborators' pension contributions paid.
What activities can be financed with a tax exemption?
The activities that can be financed through the Tax Franchise are:
- Training activities: These are actions that allow companies to improve the skills and knowledge of their workers.
- Processes for Evaluation and Certification of Labor Skills (EyCCL): They allow people to formally recognize the knowledge, skills and abilities to perform specific functions of a job, regardless of how they have acquired them.
- Internal Courses: These are courses that companies can structure and execute internally, prior authorization from Sence and obtaining the course code.
- Technical training modules leading to Professional Technical Careers: These are training modules that allow workers to access careers in Technical Training Centers (CFT). These must be authorized by the Ministry of Education and have their meshes accredited by SENCE.
- Basic and Secondary Education Studies Leveling Programs: These are programs that allow workers to complete their basic or secondary education studies. It can be in a flexible and semi-face-to-face modality in entities authorized by the Ministry of Education.
- Detection of Training Needs (DNC): It is a study that allows companies to determine the main training requirements and priorities.
- Travel and Transfer Expenses: Companies can finance up to 10% of the costs of training in travel expenses and transfers of workers. This applies to training activities that are outside the workplace.
What is the difference between OTEC and OTIC?
lOTEC is an entity that designs, executes and certifies training activities. Meanwhile, one OTIC is an entity that brings together several associated companies to manage their training plans and administer the resources allocated for this purpose. In this way, both entities must be registered with Sence and comply with the legal and technical requirements to operate. Ninja Excel is a certified OTEC and meets the requirements demanded by Sence.
What requirements must be met to use the Tax Exemption?
In addition, the activities that can be franchised by SENCE must meet the following requirements:
- That have a direct relationship with the business of the company or with the position or function of the workers.
- That they have a minimum duration of 8 hours per worker per year.
- They are carried out within the national territory.
- It must be executed within the calendar year in which the training cost is paid.
How do you obtain the Sence company key to communicate courses?
If the company manages its training funds directly (without the intermediation of an OTIC) it must request a company code to communicate the courses it wants to run. For this it must be done.
- Sign up as tax exemption user company on the Sence website (www.sence.cl). To do this, you must enter in this link.
- At the end of the process you will be able to download the Adhesion Form Online Communication System, where the access key is.
8 steps to use the Tax Exemption
To make the tax exemption, you must follow the following step by step:
1. Define and prioritize training needs, considering the objectives of the company and its workers. To do this, you can rely on the annual company training plan.
2. Search and select an OTEC that offers training activities that conform to the defined plan.
3. Register as a user company of the tax exemption on the Sence website (www.sence.cl) in companies that do not have an OTIC.
4. Communicate to Sence the course that is going to be executedr, either directly or through an OTIC.
5. Hire and pay the training activities for the executing OTEC, receiving a VAT-exempt invoice for the amount paid.
6. Settle the course to Sence with the documents that support the payment and the execution of activities. That is, such as invoices, fee slips, certificates, among others.
7. Present the Annual Affidavit before SENCE, which contains the payment of the pension and health contributions of its workers, along with the total annual payroll of taxable remunerations, paid during the calendar year
8. Sence issues the company a Expenditure Accreditation Certificate, recording in said certificate a total sum of money. This must be entered in form No. 22 of the Income Tax Declaration, in the gloss “Credit for Training Expenses.”
After entering this amount in the form, The SII will calculate the investment certified by SENCE and will reduce it from the tax payment.
How is the tax exemption calculated?
The tax exemption is calculated applying a percentage based on the company's taxable remuneration, that is, on the result without deducting taxes. The percentage varies depending on the size of the company. According to the annual taxable remuneration return from the previous year, you will know the amount available to use in the Tax Excess according to the following calculations:
|Annual remuneration sheet
|Amount to be imputed
|Amount in CLP pesos
|From 0 to 34.99 UTM
|From 35 to 44.99 UTM
|From 45 to 900 UTM
|Greater than 900 UTM
|1% of the annual return
|Calculation of the 1% annual return
**Calculated with the value UTM November 2023: 63.960
In addition, it depends on the remuneration of each worker, according to the following sections. The information is from the latest update of the manual on the Tax Exemption.
|Gross Worker Remuneration
|% imputable hourly value
|From 0 to 25 UTM
|Greater than 25 and up to 50 UTM
|Greater than 50 UTM
What benefits does the Tax Exemption have?
The Tax Franchise aims to promote investment in human capital, increase the productivity and competitiveness of companies. However, it can be difficult to summarize what the benefits of a Franchise include. Below we summarize some
- Reduce the cost of training, by being able to recover the expense through tax reduction.
- Improve the working environment and the motivation of workers, by offering them opportunities for learning and professional development.
- Increase the efficiency and quality of production processes, by having more trained and updated workers.
- Adapt to technological and market changes, by incorporating new tools and knowledge.
- Differentiate from the competition, by having more qualified and prepared human capital.
What aspects must be considered when using the Tax Exemption?
To take full advantage of the benefits of the Tax Franchise, it is important to take into account some key aspects when planning and executing training programs. Among them, we can mention:
- Define the training objectives and needs, depending on the organizational diagnosis and the profile of the workers.
- Select the suitable courses and providers, considering their quality, relevance, modality and duration.
- Properly manage the available financial resources, optimizing the use of the annual limit and seeking other complementary financing sources.
- Evaluate the impact and results of training, through quantitative and qualitative indicators that allow measuring the return on investment.
Step by step: Get your guide and discover how to take advantage of the Tax Exemption
Have the following guide on hand that will accompany you in your training processes.