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Original article: “Es poco sostenible”: Multigremial cuestiona proyecto de Kast que sube impuestos a pymes para rebajar a grandes empresas 

«It is not sustainable,» stated Juan Pablo Swett, president of the National Multigremial, while expressing concerns about the potential impacts of the «Economic and Social Reconstruction and Development Law» promoted by José Kast. This proposal seeks to increase taxes for small and medium-sized enterprises (SMEs) while concurrently offering tax reductions for large corporations.

In a discussion with CNN Chile Radio, Swett characterized the Finance Ministry’s decision to remove the permanent nature of the first category tax rate currently set at 12.5% for SMEs as a «cold shower» for the sector.

He also criticized the development of the so-called «Miscellaneous Law«, which aggregates over 40 measures across five pillars and is expected to be submitted to Congress next week.

«When you present a project that increases taxes on SMEs while lowering them for large companies, it is politically unsustainable,» he warned.

The president of the National Multigremial reminded that entrepreneurs are taxed under a reduced rate that is transitory and features a schedule of progressive increases.

Thus, it is stipulated that the current 12.5% rate will remain in place for two years until 2028, increasing to 15% in 2029 and reverting to 25% in 2030.

«It’s not that SMEs want to pay less taxes than large companies. It is that in practice, SMEs pay lower taxes than large corporations. Just like individuals are submitting their tax declarations in April to receive refunds, the vast majority of SMEs, nearly 98% of them, request refunds every April. Unlike individuals, SMEs pay Monthly Provisional Payments (PPM), which are like a savings for tax payments each April,» explained Swett.

«Every April, we have to request back everything we’ve overpaid to the government. Otherwise, SMEs are essentially providing free financing to the government in pesos, not charging interest, only to have to wait twelve months for a refund,» he emphasized.

He deemed it a «act of tax justice» to tell the government, «we shouldn’t have to pay 75,000 or 100,000 pesos in PPM each month if in twelve months you’ll need to refund us 500,000 pesos».

«Why don’t we adjust the rate to reflect what we will actually end up paying? That is why it is at 12.5%,» he questioned.

He noted that during the electoral campaign of Kast, and later in discussions with Finance Minister Jorge Quiroz before the new government took office, it was indicated that the 12.5% reduced tax rate would be included in the reform, «not as a benefit for SMEs, but as a correction for tax equity».

«We are not asking for help or subsidies from the government. All we ask is that we are not made to finance the government with SMEs’ money,» the union leader explained to CNN Chile Radio.

«It is not technical to raise taxes on SMEs to finance cuts for large companies»

He further argued that the Kast administration’s focus on protecting large corporations aims for a macroeconomic «trickle-down effect» that ignores the reality of those sustaining employment in the country, noting that SMEs account for approximately 45% of labor contracts.

«The minister is headstrong about revitalizing the economy and knows that activating large businesses, which represent 88% of the economy, is essential. Yet, politically, it is quite unscientific to raise taxes on SMEs to subsidize reductions for large companies,» he criticized.

In Swett’s opinion, the legislative debate will be crucial for adjusting the project sent by Kast to Congress, prompting him to urge legislators to restore the permanent rate of 12.5% during the legislative discussion.

To conclude, he mentioned that there is broad support from various political sectors that could make this measure viable.

La entrada Multigremial Critiques Kast’s Tax Increase Proposal for SMEs While Reducing Rates for Large Corporations se publicó primero en El Ciudadano.