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Chilean Transparency & Urban Law

Felipe Velastin's picture
Published: 19/03/18 - Country: Chile

The new law addresses:

-A greater citizen involvement in the development of Masters Plan (MP).

-A new territorial taxation according with the increase in the value of the land for Urban Limit Expansion.

-A mechanism for managing the validation of construction permits.

Regarding the Regulatory Plans:

  • The law seeks ensuring equal access to urban public goods.
  • The law seeks to simplify the inter-district plans amending.
  • Establishes a term of 10 years on upgrading an existing MP.

Regarding the new territorial taxation:

  • An income tax is established with a rate of 10% applicable to the sale of real estate or part of it, according with the increase in the value of the land.
  • Tax liability arises when  MP draft project  drawn up.
  • The calculation basis will be determined according to the difference between the Final Commercial Value and the Initial Commercial Value, according to the new law.
  • This tax does not replace or complement the general regime of taxation, it is a new tax.

The following operations will be exempt:

  • When the price does not exceed UF5, 000, at the date of sale, considering all operations executed per calendar year.
  • Those carried out under a leasing contract.
  • Those that take place after eighteen years, counted from:
  • The RP publication date that extends the urban boundary; or
  • From the fulfillment of the term of seven years from the date of notification of the Internal Revenue Service of the MP extension process.
  • If the request, that extends the urban boundary, is refused.
  • In cases of forced sales in compliance with a special or general law authorizing expropriation for reasons of public utility or national interest.

  Regarding construction permits:

The project through its article 5, grants a new interpretation to articles 184 and 185 of the Urbanism and Constructions General Law, giving retroactive effect to the benefits introduced through the contributions to public space law, which translates into the validation of building permits granted in disagreement with the MP, which means a modification of the jurisprudential criteria of the Chilean National Audit Office and of the Supreme Justice Court.

Questions:

If it is a new urban criteria, what will happen with the increase in the value of the land according with other urban aspects?

Likewise, what will happen with the decreases in the value product of taxes or urban aspects?

If the objective is the validation of administrative acts, then it would not be better to modify the urban regulations directly?

A greater number of MP will be effectively modified?

Will the municipalities have sufficient resources to carry out such updates?

Will the value of the tax be transferred to the final purchaser of the product?

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Felipe Velastin's picture

Director of the Contentious Department of Cuevas Abogados (Since 2017).

He was lawyer in the Division of Infrastructure and Regulation of the Committee of Housing environment and Urban Planning (2012-2016).
He also worked as lawyer associated at Bartucevic, Mauriz y Cía. He worked in the department litigations and administrative contentious (2011-2012).