SANTIAGO, Oct 9 (Reuters) - Chile’s Empresas CMPC, a leading wood pulp and paper producer, said on Thursday that the country’s recently implemented tax reform will hit its bottom line to the tune of $187 million in 2014.
The reform, one of the key campaign promises of President Michelle Bachelet, became law last month and seeks to increase the tax haul by 3 percentage points of gross domestic product by 2018 to help pay for improvements to the education and health-care systems.
As a result of the changes, CMPC said its “net liabilities due to deferred taxes will increase one time by approximately $302 million,” which will “impact distributable liquid income in 2014 by approximately $187 million.”
With the reform, corporate taxes will gradually increase from the current 20 percent. Companies must either opt for 25 percent with personal taxes paid on an accrued basis or 27 percent, with taxes paid on a dividend basis. The choice has to be approved by shareholders.
Shortly after Bachelet took office in March, CMPC was the first major Chilean company to warn it would likely scale back spending due to the reform. (Reporting by Anthony Esposito; Editing by Leslie Adler)