Personal data protection: the new paradigm of the tax secret or tax reserve in Chile

Abstract

Handling personal data is increasingly important for both business development and the affairs of state. In fact, data are often referred to as the new ‘oil’1 of the information society. The State requires this information to regulate tax compliance, prosecute tax evasion, deter tax avoidance, and provide services to taxpayers.2 Taxpayers finance public expenditures through tax payments by reporting taxable transactions, receipt of income, payment of deductible expenses, and self-reporting the resultant taxes due. Tax authorities review filed tax declarations to ensure that tax liabilities are properly quantified and that payment, where applicable, has been timely made. Tax authorities require taxpayers’ tax information and personal data to ensure that the correct amounts of taxes are collected and that any overpayments of taxes are refunded. Taxpayers are therefore obligated both to pay taxes to finance public expenditures and communicate necessary information to the taxing authority, an obligation that ‘encompasses the [taxing authority’s] duty to inform third parties and the taxpayer’s own duty to collaborate’.3 Consequently, tax administrators possess large amounts of personal data of a tax, financial and commercial nature. Such data could be used to build profiles of individual taxpayers’ purchasing and payment habits.