LAW NO. 20.097 INTRODUCES AMENDMENTS TO ARTICLE 2 OF LAW NO. 20,026, WHICH ESTABLISHES A SPECIFIC TAX ON THE INCOME OF MINING ACTIVITY AND ADDS A NEW TRANSITIONAL ARTICLE Having present that the H. National Congress has |! approval to the following Bill: " Single article.-Amend Law No 20,026, as follows: 1) Add in the second transitional article, the following second, third and fourth points: " In the cases in which a foreign investment recipient is involved in the capital of a foreign investment mining company, partners who enjoy the rights of The invariability of Articles 7 and 11a, numerals 1 and 2, of Decree Law No 600 of 1974, and other partners, national or foreign, which do not enjoy any of those rights or which, having renounced the guarantee of invariability the tax established in Article 7 and, as a result, the security laid down in Article 11a No 1, (a) in the case of a person who is entitled to a tax on the basis of Article 11a (2) of the Law on the Law on the Protection of the State of the European Union, Income tax for the specific tax on the mining activity paid by the company receiving its investment. This appropriation shall be equivalent to the proportion that the share held by the foreign investor in the profits of the mining company represents in the total of the tax established in Article 64a of the law indicated, due by that undertaking in the same financial year corresponding to the income concerned with the respective Additional Tax. For this purpose, the tax must be adjusted according to the variation in the price index to the consumer between the month preceding the month in which the specific tax laid down in Article 64 bis of the same law and the month prior to the one in which it is to be charged as a credit against the Additional Tax that affects the foreign investor. The company shall calculate and keep the credit record established in this article in accordance with the instructions issued by the Internal Revenue Service. The credit established in the preceding paragraph shall be deducted from the amount resulting from the application of the rate of the First Category Tax corresponding to the amount of the tax in Article 64a of the said Law on Income Tax, which is deduced as expenditure on the determination of the taxable income of the First Category Tax, in the proportion of the participation that the respective foreign investor has in the profits of the mining company. If the product of the imputation set forth in the above incisos is a surplus in favor of the foreign investor, it shall be returned as a provisional payment in the form provided for in the Law on Income Tax, as appropriate. " 2) Add the following Article 8: " Transitional Article 8.-Those foreign investors who have received the provisions of the preceding transitional article and are holders of the rights granted by the numeral 2 of the Article 11a of Decree Law No. 600 of 1974 concerning the treatment of depreciation (a) accelerated assets, and those investors who maintain in force foreign investment contracts under which they enjoy such a right, may avail themselves of the provisions of Article 3 of this Law, the terms and conditions laid down in Article 3 of that Article, with the following amendments: (1) They may deduct from the operational taxable income laid down in Article 64a of the Law on Income Tax, interest paid or accrued on amounts due, within the year referred to in that tax; where the interest paid or owed to entities or persons related to the mining operator is deducted from the operational income, in accordance with the provisions of Article 59 (1) of the Law on the Tax on the (iii) the recipient of the investment and the income of the investment firm; Foreign investors must expressly and irrevocably renounce the rights referred to in the preceding article 3 (2), and (4) the application to the Committee for Foreign Investments, stating the willingness to benefit from the rules of this Article and the waiver referred to in the preceding number shall be submitted by 30 June 2006 at the latest. '; And because I have had to approve and sanction it; therefore, promulgate and take effect as the Law of the Republic. Santiago, March 28, 2006.-MICHELLE BACHELET, President of the Republic.-Andres Velasco Branes, Minister of Finance.-Karen Poniachik Pollak, Minister of Mining. What I transcribe to you for your knowledge.-Salute intently to you, Maria Olivia Recart Herrera, Deputy Finance Secretary.