Below, we will tell you what a legal obligation is, what types exist, which ones apply to you and which cases have exemptions.
These are the documents, certificates or declarations that must be presented to different institutions, such as: the Ministry of Justice, Civil Code, Internal Revenue Service (SII), among others.
These are carried out with the aim of achieving greater transparency and trust in NPOs. At the same time, they are tools that serve to protect the organization and prevent risks, such as: bad image, abuse and mistreatment, financial problems, failure to comply with legal responsibilities, misconduct by directors and executives, among others, which can lead to the dissolution of the organization.
Fulfilling obligations is the responsibility of the board of directors , according to Article 511 – 2 of the Civil Code , it has the duty of care and loyalty , as well as directing and meeting objectives. Directors are the ones who must manage conflicts of interest, plan, monitor and properly manage assets, inform themselves and attend meetings, manage risks, draw up minutes and sign them, among others.
Tax obligations
Like all legal entities, NPOs have tax obligations to comply with, especially in relation to Income Tax and Value Added Tax. They must also comply with the registration in the Single Tax Roll, make Monthly Provisional Payments and practice Tax Withholdings , where applicable.
The exemptions are:
The Tax on Rejected Expenditure does not apply to them.
Payment of municipal patent (if applicable, they must complete the exemption procedure at the municipality).
They pay a rate of 25% (income tax).
If you only have income/resources through donations or competitive funds that you have won, you will not have to start your activity in SII, it is enough to have a RUT.
There are other cases in which they can access certain tax exemptions, but they must process them or see if their particular conditions allow it.
Labor obligations
Foundations or corporations must guarantee certain protections and philippines mobile number responsibility for workers like any other organization.
The exemptions are:
They do not pay legal gratuities.
They are not obliged to hire 1% of workers with disabilities or disability pensions (out of 100 workers). In any case, it is something that increases labour inclusion and is recommended to apply.
Civil obligations
Special rules on constitution, operation and liability (Articles 545 – 564, Civil Code).
Internal obligations
These obligations are considered the legal minimums that must be implemented within an OSFL. Within the foundation/corporation, it is key as a first step to review the statutes , which must be aligned with what the law requires in order to be approved. There are standard models in the Ministry of Justice that can be used as a basis, but it is always good to adapt them to the reality of the organization because the statutes must be complied with (see the model statutes here: Model Statutes for Associations and Foundations – Ministry of Justice and Human Rights (minjusticia.gob.cl).
Another very important point is to keep a book of minutes , with a record of all the board meetings that are held. It should mention who participated, who justified themselves, what agreements were made, among others.
In the case of corporations , in addition to the board of directors, there must be a meeting . The members of this meeting are called partners. They should pay their membership dues, appoint an ethics committee, and ensure that the board of directors is doing a good job. The law requires that both the board of directors and the meeting must meet at least once a year.
Obligations to the IRS
Tax returns must be filed with the IRS , which are filed to the extent that donations with tax benefits under certain laws are received or to the extent that a certain level of income is reached. For this, there are three types of tax returns , depending on the particular law to which they are subject:
Affidavit 1832: Municipal Revenue Law, national reconstruction, educational purposes, instruction programs, firefighters, SENAME, SERVIU and donations for COVID-19 catastrophe.
Affidavit 1828: Sports Law, donations for social purposes and cultural donations, regarding projects approved by January 1, 2014.
Affidavit 1945: special for OSFL in the case of having annual income over 12,000 UF and always from political parties and municipal corporations.
These must be submitted in March of each year , generally the last week of the month, between the 25th and 30th.
Another obligation before the Internal Revenue Service, when the organization begins its activities, is to keep an accounting account.
In the event that the foundation or corporation only receives contributions or donations and does not carry out activities taxed with 1st category tax, it may keep a statement of sources and uses that identifies at least, in chronological order: