Common use of Annual Tax Reporting Obligation Clause in Contracts

Annual Tax Reporting Obligation. The Chilean Internal Revenue (the “CIRS”) requires all taxpayers to provide information annually regarding: (i) the taxes paid abroad which they will use as a credit against Chilean income taxes, and (ii) the results of foreign investments. These annual reporting obligations must be complied with by submitting a sworn statement setting forth this information before March 15 of each year. The forms to be used to submit the sworn statement are Tax Form 1853 “Annual Sworn Statement Regarding Credits for Taxes Paid Abroad” and Tax Form 1851 “Annual Sworn Statement Regarding Investments Held Abroad.” If the optionee is not a Chilean citizen and has been a resident in Chile for less than three years, the optionee is exempt from the requirement to file Tax Form 1853. These statements must be submitted electronically through the CIRS website at xxxx://xxx.xxx.xx. Under current rules, the Options may be subject to income tax at both the time of grant and the time of exercise. Capital gains tax applies when the shares acquired from exercise are sold. The optionee must report to the CIRS stock option grants and exercises, as well as any stock sales, on the optionee’s monthly tax return for the date of the taxable event. Applicable tax rules may often subject to change, sometimes on a retroactive basis. The optionee should consult with his or her personal legal advisor regarding tax implications of the Options.