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Chile’s Investment Guide
Content
Welcome 3
1 The Chilean Economy 8
1.1 Introduction to the Chilean Economy 9
1.2 Geography and Overview of Chile 10
1.3 Economic Situation 11
1.4 Economic Records 13
1.5 Economic Sectors and Balance of Trade 17
1.6 Risk Ratings 20
1.7 Population figures 22
1.8 Chile's Performance in the Covid-19 Health Crisis 24
2 Chile’s Investment Scenario 30
2.1 Introduction to the Investment Scenario in Chile 31
2.2 Doing Business 32
2.3 Tax Regime 34
2.4 Labor Regime 39
2.5 Financial Reporting 45
3 Appendices 47
3.1 Investment Regulation and Promotion Agencies 48
3.2 Our services 51
EY Chile Contacts 55
2
Welcome
Macarena
Navarrete
Managing
Partner, EY
Chile
Welcome to the "Chile's Investment Guide“, which aims to provide a first
look at the Chilean market and the necessary considerations to invest in
this country.
Chile is one of the most attractive emerging markets and traditionally
leads international assessments in Latin America. Two recent examples
are the 2020 versions of the World Competitiveness Ranking by the
International Institute for Management Development (IMD) in Switzerland
and the Index of Economic Freedom by the Heritage Foundation in which
the country is ranked the highest in the region.
Also, it is the market with the best credit rating in the region, according to
the main risk rating agencies, showing the confidence and strength of its
economy.
In addition, it has a well-known drive for global integration, holding free
trade agreements with 64 markets, which represent 86.3% of the world's
GDP. The country has been a pioneer in policies to attract investment, with
clear systems and mechanisms. This approach implies support for foreign
capital that other destinations are not able to offer.
Admittedly, the international context is uncertain, and in addition to the
ongoing pandemic, Chile has faced a complex situation derived from the
social crisis that erupted in 2019. However, the country is carrying out
profound changes in an orderly manner and within its democratic
institutional framework. Consequently, the 2020 referendum, in which the
drafting of a new Constitution was approved, and this year's elections, to
define those who will have the task of writing the text, went off without a
hitch, following the country’s tradition.
With this guide, we want to contribute to the deepening of the relations
between Chile and the world. We will provide key information regarding the
main economic, tax, legal and labor aspects, among other information,
that an investor needs to know when doing business or investing in the
country.
The changes in Chile and the international business scenario are
increasingly accelerating, so we invite you to contact us if you would like a
deeper view or update of the content that you will find in the following
pages.
Welcome to Chile.
3
Why EY? Our purpose is to build a
better working world,
We provide global creating long term value
for our people, clients,
knowledge and
and society.
experience tailored EY Global
to your needs +298,000
people
+150
countries
+700
offices
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revenue (USD) as
of June 20, 2020
EY Chile
EY Chile Offices
Viña del Mar +1,500
Phone: +56 (32) 269 0707
Libertad 1405, Of. 2002 people
Santiago +80 years
Phone: +56 (22) 676 1000
Avda. Presidente Riesco 5435,
in Chile
Piso 4, Las Condes
Concepción
4
Phone: +56 (41) 246 7000 offices
Rengo 94, Of. 21
Puerto Montt
+2,500
Phone: +56 (65) 228 5700 clients
Concepción 120, Of. 906
4
Why EY?
We are a trusted Assurance
Tax
partner who can Consulting
help and guide you Strategy &
in each stage and Transactions
Managed
challenge of your Services
business Legal
Business challenges
Assure Grow
In the current context it is vital to protect Driving growth for future success.
your company against threats and maintain
trust and credibility in the market. At EY, we help our clients identify new
opportunities for their business and succeed
At EY, we help you to build trust, protect and in the market.
secure your business.
Transform Operate
The companies that adapt are the ones that The increasing volume and complexity of
prevail. operational activities tend to distract leaders
from driving their businesses forward.
At EY, we help you plan and implement the
changes your business requires to thrive and Delegating the operation and management of
reach its full potential. services to EY allows our clients to lead from
the strategy.
How we help you solve this challenges
Strategy | Consulting | Transactions | Assurance | Tax | Legal |
Managed Services
Technology
5
Why EY?
We are leaders
in Chile and the
world
Market share per EY audit client
(1) S&P IPSA: composed of
the largest and most liquid
services EY non-audit client companies on the Santiago
Stock Exchange. Market
All other companies share is calculated based on
company accounts with
significant EY revenue in
EY Chile
fiscal year 2020.
(2) IGPA: groups the majority
IPSA1 IGPA2 Ranking 5003 of companies listed on the
Santiago Stock Exchange.
Market share is calculated
based on company accounts
7% with significant EY revenue
23% 38% 26%
in fiscal year 2020.
40% 38% (3) Ranking 500: composed
of the 500 companies with
highest revenue in Chile
during year 2019. Market
share is calculated based on
company accounts with
53% significant EY revenue in
39%
fiscal years 2019 and 2020.
36%
(4) Fortune 500 and Forbes
Global 2000: composed of
America’s 500 largest
companies and the world’s
EY Global 2000 largest companies in
revenue iduring 2019.
Fortune 5004 Forbes Global 20004 Market share is calculated
based on company accounts
with at least US$500,000 in
EY revenue during FY20.
16% 23% 27% 27%
61% 46%
6
Why EY?
Our network of
alliances brings value
to your business
The EY and Microsoft alliance
EY and IBM
combines EY's knowledge and
collaborate to help
experience in digital
clients accelerate the
technologies with Microsoft's
use of transformation
scalable enterprise cloud
technologies.
platform.
EY and GE digital develop and
EY and SAP help
deliver innovative industrial IoT
companies leverage
(Internet of Things) services to
industry-leading
help companies complete their
technologies to drive
digital transformation.
digital transformation.
EY and Kinaxis help clients
achieve supply chain excellence EY and LinkedIn are helping
and modernize their capabilities organizations adapt to changes
crosswise, through the in purchasing behavior through
incorporation of technologies digital technology.
such as augmented intelligence
and machine learning.
EY and Cisco help clients EY and Blue Yonder support
increase operational efficiency, clients in transforming their
collaboration, and asset supply chain and improving
productivity to accelerate their the performance of their
digital transformation. operations.
EY and Blue Prism have
EY and Adobe bring together
combined their capabilities
strategy, design, infrastructure
of excellence to help unlock
and knowledge to help
business digital
companies generate disruptive
transformation through
growth with differentiated
intelligent automation.
digital experiences.
Learn more about how our global alliances can help your company: ey.com/alliances 7
The Chilean
Economy
8Introduction to the
Chilean Economy
This new edition of Chile's Investment Guide finds the country and Despite the downturn in economic figures, a strong upturn in the
the world still facing an unprecedented health crisis. New waves of economy is expected in the second half of 2021.
covid-19 have struck several countries deeply, having a major
impact on societies and their economies. On the one hand, Chile is one of the world leaders in vaccination.
According to the government, as of May, the immunization
In Chile, this scenario is combined with a complex political and campaign against covid-19 has reached 69.2% of the target
social background, which the country has been experiencing since population with one dose and 52.3% with two doses3. This will allow
October 2019, when a period commonly called "Social Unrest" controlling the health situation and reducing mobility restrictions.
began. A fare hike in Santiago's public transportation system gave
rise to demonstrations and riots that began in that city but spread On the other hand, Chile is also beginning to see the effects of the
throughout the country, with demands concerning social and improved situation of its trading partners, especially China, which
economic inequality. has strongly boosted the price of copper in recent times.
This movement has prompted the country to embark on a journey According to Oxford Economics, all of the above will influence GDP
that will involve drafting a new constitution. In May 2021, Chileans to expand between 8.5% and 9.5%1 by 2021, with medium-term
elected the 155 representatives of the Constituent Convention, growth averaging around 2.1%4. However, the pandemic situation
who will be in charge of drafting the new text. This process will and the uncertainty due to the political and electoral processes
culminate in an exit referendum in mid-2022, which will be held to cause the indicators to vary from day to day and hamper estimates
approve or reject the proposed new constitutional text. of their evolution.
In this context, the pandemic has hit the economy heavily, with the Despite the complex situation, Chile continues to lead the region in
Gross Domestic Product falling by 5.8%1 in 2020 and unemployment terms of macroeconomic stability and financial resilience: the
rising to 10.3%2. The effects were partially offset by one of the current account deficit has been contained, the net public debt is
most robust goverment responses in the region, which included very moderate, the financial system is well regulated, and inflation
cash transfers, tax deferrals and reductions, liquidity provisions expectations are well grounded, thanks to an independent and
and collateral, and several withdrawals from pension funds. highly credible central bank. The country also has a financial
stabilization fund to finance possible fiscal deficits as well as
amortizing the public debt, helping to ensure that fiscal spending is
not affected by the fluctuations of the world economy.
1. Monetary Policy Report, June 2021. Central Bank of Chile. 4. Country Economic Forecasts, Chile. April 2021.
2. Statistical bulletin: quarterly employment. National Institute of Statistics. 9
3. Daily Report, May 31st 2021. Ministry of Health.Geography and
Overview of Chile
Chile is a strip of land on the western coast of the Southern Cone of According to different economic indicators, Chile is projected to be
America, with islands in the Pacific Ocean and sovereignty over the a leader in the region, positioning itself as a competitive nation with
Antarctic territory. a favorable foreign investment record.
Population5 Since 2010, the country has been a member of the Organisation for
19,678,363 Land area
756,096 km2 Economic Co-operation and Development (OECD).
Urban: 88.6%
Rural: 11.4%
Currency Main language
Chilean peso Spanish
US$1 = CLP 7196
Climate
Religion Mediterranean in the
Freedom of religion or belief central zone, desertic
Mainly catholic in the north and
oceanic in the south
World clock7
Daylight saving time:
• GMT-3 (continental Chile)
• GMT-5 (insular Chile)
Standard time
• GMT-4 (continental Chile)
• GMT-6 (insular Chile)
Natural resources
Copper, gold, fishing resources, forestry resources,
iodine, lithium, salmon, fruit, among others,
5. Estimated value for 2021. Estimates and projections 2002-2035 base 2017. National Institute of Statistics.
6. Value as of June 10, 2021. Daily indicators. Central Bank of Chile. 10
7. World clock. Hydrographic and Oceanographic Service of the Chilean Navy.Economic Situation
Main economic indicators
Indicator Chile
Gross Domestic Product 2020 (current prices, USD, million) 8 $252,756
Gross Domestic Product 2020 (current prices, purchasing power parity, international dollars,
$454,668
million)8
Per Capita Gross Domestic Product 2020 (current prices, purchasing power parity, international
$23,366.27
dollars)9
International Reserves 2020 (USD, million)10 $39,200
Foreign Debt 2020 (USD, million)11 $208,981
Foreign Debt 2020 (percentage of GDP)11 74.1%
Total Public Debt 2020 (USD, million)12 $91,625
Total Public Debt 2020 (percentage of GDP)12 32.5%
Unemployment rate (moving quarter of December 2020 to February 2021) 13 10.3%
Population below poverty line 202014 10.7%
Minimum Monthly Wage (USD)15 $454
Chile has been the country with the highest per capita GDP in Latin The country is highly developed in several aspects, such as life
America in recent years, coming close to countries such as Portugal expectancy at birth and university education coverage, among
and Croatia. The OECD has recognized the growth experienced by others. Chile ranks 43rd on the United Nations’ 2020 Human
the country, accompanied by tax modernization proposals and the Development Index16, being the leader among Latin American
pension system reform, which seeks to encourage private countries.
investment, simplify the system and make it more equitable.
8. World Economic Outlook Database. April 2021. International Monetary Fund. 13. Statistical bulletin: quarterly employment. National Institute of Statistics.
9. Estimated value. World Economic Outlook Database. April 2021. International 14. Poverty and extreme poverty projections. Social Panorama of Latin America. ECLAC.
Monetary Fund. 15. Minimum monthly wage. Department of Labor.
10. Reserve assets. Central Bank of Chile. 16. Human development report 2020. United Nations Development Programme.
11. Balance of payments, international investment position and foreign debt. Income as of
the closing of 2020. Central Bank of Chile.
12. Evolution of Debt. Treasury Department.
11Per capita gross domestic product. Purchasing power parity. International
dollars.
25,000
20,000
15,000
10,000
5,000
0
2015 2016 2017 2018 2019 2020 2021
Chile Argentina Mexico Brazil Colombia Peru
Source: World Economic Outlook Database. April 2021. International Monetary Fund.
According to the International Monetary Fund (IMF), in 2026, This agency expects a GDP increase ranging between 8.5% and
Chile's per capita GDP will reach US$30,000, measured in 9.5%. in 2021. For 2022 and 2023, the expected growths are
purchasing power parity (PPP), thus becoming the first country in between 2.0% and 3.0%, and between1.75% and 2.75%
South America to reach this objective17. This goal, previously respectively18, slightly below the growth trend estimate.
estimated for 2022, was delayed for four years due to the
pandemic. The pandemic and social and political instability may affect these
figures. In April, the cases worsened, forcing the new severe
The economic indicators have declined due to the health crisis, with mobility restrictions in a large part of the country.
GDP falling 5.8% in 202018. Earlier this year, the economy rebounded,
growing 0.3% over the same period last year, according to the Central Despite the above, the figures for the beginning of the year have
Bank19. shown a strong recovery. The Monthly Index of Economic Activity
(IMACEC) grew 6.4%20 in March, the highest increase since June
2018. Along with this, it is expected that the favorable
international outlook -which has recovered faster than expected-
and the good development of the vaccination program in Chile, will
stimulate a good performance of the economy forward.
17. World Economic Outlook Database. April 2021. International Monetary Fund.
18. Monetary Policy Report, June 2021. Central Bank of Chile.
19. Quarterly National Accounts. Central Bank of Chile. 12
20. IMACEC March 2021. Central Bank of Chile.Economic Records
Gross Domestic Product, Levels and Growth
250,000 8%
6%
200,000
4%
150,000 2%
100,000 0%
-2%
50,000
-4%
0 -6%
2017 2018 2019 2020
GDP at current prices (Chilean pesos*, billions)
GDP volume at chained previous year's prices (Chilean pesos*, billions)
GDP at current prices (variation compared to the previous period)
GDP volume at chained previous year's prices (variation compared to the previous
period)
Source: Gross domestic product. 2013 reference. Central Bank of Chile.
*US$1 = CLP 719 (Value as of June 10, 2021. Daily indicators. Central Bank of Chile.)
1319 2021
General CPI 2018 = 100. Monthly Variation
0.8
0.6
0.4
0.2
0
-0.2
Jan
Jan
Nov
Jan
Nov
Dec
Dec
Sep
Feb
Oct
Sep
Oct
Mar
May
Apr
Jun
Aug
Feb
Mar
May
Aug
Feb
Mar
May
Jul
Apr
Jun
Jul
Apr
Source: CPI and underlying measures. Central Bank of Chile.
In Chile, the Central Bank of Chile is the agency in charge of Multilateral Exchange Rate (MER23) and Foreign
ensuring low and stable inflation over time. It structures its
monetary policy within a conceptual framework of targets and uses
Currencies24
End of May
,instruments to ensure that the annual variation of inflation is Currency 2017 2018 2019 2020
around 3% annually with a tolerance range of one percentage point. 2021
This policy is complemented by a flexible exchange rate regime. US dollar 649.33 640.29 702.63 792.22 712.26
In 2020, inflation closed at 3%, same as in 201921 and in line with Euro 732.44 755.74 786.35 902.68 864.58
the forecast of the Central Bank of Chile. In its latest Monetary Yen 5.79 5.8 6.45 7.42 6.52
Policy Report, the agency states that inflation will raise to around
3.5% this year, and will then return to figures around 3% for the rest Yuan renminbi 96.15 96.86 101.61 114.72 110.74
of the forecast horizon22. MER 106.11 102.68 106.4 114.95 105.28
Evolution of Multilateral Exchange Rate (MER23) and International
Currencies24 (baseline 2014=100)
140%
130%
120%
110%
100%
90%
2015 2016 2017 2018 2019 2020
US dollar Yen Yuan Renminbi Euro MER
21. Macroeconomic statistics. Central Bank of Chile. Chile.
22. Monetary Policy Report, June 2021. Central Bank of Chile.
23. Chile multilateral exchange rate. Central Bank of Chile. 14
24. Nominal exchange rate (Chilean pesos per unit of foreign currency). Central Bank ofPublic debt, billions of Chilean pesos
70,000
70,000 35%
60,000
60,000 30%
50,000
50,000 25%
40,000
40,000 20%
30,000
30,000 15%
20,000
20,000 10%
10,000
10,000 5%
00 0%
2017 2018 2019 2020
Net Debt Gross Debt Net Debt (percentage of GDP) Gross Debt (percentage of GDP)
Source: World Economic Outlook Database. April 2021. International Monetary Fund.
International reserves, millions of US dollars
60,000 20%
50,000
15%
40,000
30,000 10%
20,000
5%
10,000
0 0%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Reserve Assets 25 International Reserves (percentage of GDP) 26
The pandemic has driven emergency and recovery plans, In Chile, the Treasury Department estimates that the gross public
which have increased fiscal expenses around the world. debt may increase from 28% of GDP in 2019 to 43% of GDP by the
end of 202527, with a fall in sovereign wealth fund savings.
Foreign debt at market value, millions of US dollars
250,000 80%
70%
200,000 60%
150,000 50%
40%
100,000 30%
50,000 20%
10%
0 0%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Foreign debt at market value, millions of US dollars 28
29
Total foreign debt (percentage of GDP)
25. Reserve assets. Central Bank of Chile. 29. Total foreign debt. Central Bank of Chile.
26. International Reserves. Central Bank of Chile.
27. Challenges and opportunities for Chile’s recovery. Treasury Department. 15
28. Foreign debt at market value. Central Bank of Chile.Balance of payments and current account, millions of US dollars
100,000
80,000
60,000
40,000
20,000
0
-20,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
30 30
Exports of FOB assets Imports of FOB assets
Balance of trade 31 Current account 31
Consolidated assets, millions of US dollars32
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Sovereign Wealth Funds (FEES) Sovereign Wealth Funds (FRP) Education Grants (FpE)
Other Assets (Chilean pesos) Other Assets (US dollar)
30. Exports and imports of goods FOB. Central Bank of Chile.
31. Balance of trade and current account. Central Bank of Chile.
32. Total consolidated assets. Central Bank of Chile. 16Economic Sectors and
Balance of Trade
The pandemic had a significant impact on the performance of Trade reached USD 130,761 million in 2020, representing a fall of
several sectors in 2020. According to the Central Bank of Chile, the 6.4% with respect to 2019 (-US$ 8,930 million), according to a
most impacted sectors were the service activities and construction, report by the Office of the International Economic Relations
with personal services, transportation, and restaurants and hotels Undersecretary (Subrei) with figures from the Central Bank of
standing out among the services. The 0.3% increase in activity in Chile. However, the first quarter of 2021 had a strong rebound of
the first quarter of 2021 reflects a mixed picture. The most 26.3% compared to the same period of 2020, the highest amount in
significant increase was recorded in commerce, followed by the last decade.
agricultural and forestry activities and manufacturing. Meanwhile,
service activities continue to show difficulties due to the health
crisis.
GDP by economic sector, 2020, percentage of GDP33
Financial and business services
Mining
Personal services
Retail, restaurants and hotels
Manufacturing
Housing and real estate services
Construction
Public administration
Transport
Agriculture and forestry
Electricity, gas, water and waste management
Communications and IT services
Fishing
0% 2% 4% 6% 8% 10% 12% 14% 16%
33. Share by type of economic activity. Central Bank of Chile.
17GDP by economic sector (annual variation percentage for each sector)34
Economic sector 2017 2018 2019 2020
Financial and business services 3% 7% 4% -1%
Mining 27% 4% -1% 40%
Personal services 7% 9% 6% 0%
Retail, restaurants and hotels 6% 7% 0% -3%
Manufacturing 0% 8% -1% 0%
Housing and real estate services 10% 10% 4% -2%
Construction 0% 7% 10% -12%
Public administration 6% 5% 5% 3%
Transportation -3% 0% 7% -10%
Agriculture and forestry 1% -5% 3% 18%
Electricity, gas, water and waste management 2% 3% 6% 6%
Communications and IT services 0% 1% -4% -8%
Fishing 39% -9% 15% -29%
Exports of goods35 (FOB) and services36 in 2020, millions of US dollars
Mining
Industry
Agriculture, forestry and fisheries
Transport
Other business services
Financial, insurance and pension services
Telecommunications, IT and information
services
Travel
Personal, cultural, recreational and other
services
0 10,000 20,000 30,000 40,000 50,000
Exports of goods35 (FOB) and services36, annual variation percentage for each sector
Economic sector 2017 2018 2019 2020
Mining 21% 5% -10% 18%
Industry 7% 12% -8% -5%
Agriculture, forestry and fisheries -2% 13% 5% -6%
Transportation -2% 3% 1% -21%
Other business services -8% 13% -4% -18%
Financial, insurance and pension services 6% -3% 7% 8%
Telecommunications, IT and information services 1% 15% 4% 8%
Travel 17% -8% -21% -82%
Personal, cultural, recreational and other services 2% -1% -15% -15%
34. Gross domestic product by type of economic activity, at current prices, spliced
series, reference 2013 (billions of Chilean pesos). Central Bank of Chile.
35. Exports of goods (millions of dollars FOB). Central Bank of Chile. 18
36. Exports of services (millions of dollars). Central Bank of Chile.Imports of goods37 (CIF) and services38 in 2020, millions of dollars
Intermediate goods
Consumer goods
Capital assets
Transport
Other business services
Personal, cultural, recreational and other
services
Financial, insurance and pension services
Telecommunications, IT and information
services
Travel
0 5,000 10,000 15,000 20,000 25,000 30,000
Imports of goods37 (CIF) and services38, annual variation percentage for each sector
2017 2018 2019 2020
Intermediate goods 9% 19% -6% -14%
Consumer goods 16% 8% -10% -19%
Capital assets 2% 13% -1% -14%
Transportation 10% 6% -2% -11%
Other business services -1% 14% -8% -10%
Personal, cultural, recreational and other services 5% 8% -3% -18%
Financial, insurance and pension services 13% 0% 3% 0%
Telecommunications, IT and information services -10% 17% 11% 8%
Travel 8% 3% 3% -78%
Foreign direct investment flows 2012-2019, percentage of total39
Mining
Electricity, gas and water
Financial services
Commerce
Not allocated
Transport and storage
Manufacturing
Communications
Construction
Other services
Agriculture and fishing
Real estate and business services
Hotels and restaurants
0% 5% 10% 15% 20% 25%
37. Imports of goods (million dollars CIF). Central Bank of Chile.
38. Imports of services (million dollars). Central Bank of Chile.
39. Direct investment flows by economic sector (million dollars). Central Bank of Chile. 19Risk Ratings
Chile continues to be the country in the region with the lowest Debt rating in Latin America40
credit risk and the best rating from risk rating agencies. Although
the global situation poses an uncertain scenario for all economies, Country Moody’s S&P Fitch
the country continues to show leadership in terms of payment
conditions, with solid legal and political institutions. Chile A1 A A-
Peru A3 BBB+ BBB+
Mexico Baa1 BBB BBB-
Colombia Baa2 BBB- BBB-
Uruguay Baa2 BBB BBB-
Brazil Ba2 BB- BB-
Bolivia B2 B+ B
Ecuador Caa3 B- B-
Argentina Ca CCC+ CCC
40. Country debt rating (foreign currency, long term). Latest information available as of April 2021. Expansion (Datosmacro.com)
20Risk rating description41
Quality Moody's S&P Fitch
The highest quality Aaa AAA AAA
High quality Aa1 AA+ AA+
High quality Aa2 AA AA
High quality Aa3 AA- AA-
Upper-medium-grade A1 A+ A+
Upper-medium-grade A2 A A
Upper-medium-grade A3 A- A-
Lower-medium-grade Baa1 BBB+ BBB+
Lower-medium-grade Baa2 BBB BBB
Lower-medium-grade Baa3 BBB- BBB-
Speculative non-investment grade Ba1 BB+ BB+
Speculative non-investment grade Ba2 BB BB
Speculative non-investment grade Ba3 BB- BB-
Highly speculative B1 B+ B+
Highly speculative B2 B B
Highly speculative B3 B- B-
Substantial risk Caa1 CCC+ CCC+
Substantial risk Caa2 CCC CCC
Substantial risk Caa3 CCC- CCC-
Extremely speculative Ca CC CC
Extremely speculative C
Little prospect of recovery SD RD
In default C D D
In default DD
In default DDD
Not rated WR NR
41. Description of risk ratings. Expansion (Datosmacro.com)
21Population figures
Population pyramid42
100+
90-94
80-84
70-74
60-64
50-54
40-44
30-34
20-24
10-14
0-4
800,000 600,000 400,000 200,000 0 200,000 400,000 600,000 800,000
Male Female
42. Total population by sex and urban-rural area, according to age groups. CENSUS 2017 results. National Institute of Statistics.
22National workforce and inactive persons, monthly average, thousands of
persons43
10,000
8,000
6,000
4,000
2,000
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Total Workforce Active Inactive
43. National workforce and inactive persons, National Institute of Statistics. (monthly average, thousands of persons). Central Bank of Chile.
23Chile's Performance
in the Covid-19
Health Crisis
Chile reported its first Coronavirus case on March 3, 2020, the In addition, the Social Welfare Network is a fiscal response that has
fourth country in the region to do so. Soon the pandemic struck the mobilized close to USD 30 billion. According to the government,
country, and by June 2020, it was one of the most affected these resources allowed to expand the protection to three out of
countries in the world per capita. four persons who are in turn covered or receive relief from this
Network. The measures include initiatives such as the Emergency
However, thanks to initial measures that focused on strengthening Family Income, the Employment Protection Law, the COVID-19
hospital capacity, the health system never collapsed as it did in Bonus, Credits, solidarity loans, the Employment Subsidy and the
other countries in the region. distribution of more than 6 million food boxes.
Since January 2020, the government has responded with three Chile was one of the first countries to start a mass vaccination
main measures: the Step by Step plan, the Social Protection program, securing 35 million doses from different sources. Also,
Network and the vaccination plan44. the vaccination process was quick, which allowed the covid-19
immunization campaign to reach 69.2% of the target population
The government developed the Step by Step plan, a gradual with one dose and 52.3% with two doses by May 2021.
strategy to deal with the pandemic according to the health situation
of each particular area. There are four gradual steps or scenarios,
ranging from Quarantine to Initial Opening, each with specific
restrictions and obligations. The advance or regression from one
particular step to the other depends on epidemiological indicators,
health care network and traceability.
44. Chile's Management of the Pandemic. Government of Chile.
24Total Cases45
18,000,000
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0
Brazil Argentina Colombia Mexico Peru
Chile Ecuador Bolivia Uruguay
The region is enduring new waves of coronavirus, and Chile is no All this has forced the authorities to impose new measures
exception, despite the successful vaccination campaign. In fact, the restricting mobility, which has impacted employment. The
worst figure of the entire pandemic was recorded on April 9 2021, unemployment rate in Chile during the February-April 2021 mobile
when 9,171 infections were reported. quarter reached 10.2%, according to the information recorded in
the National Employment Survey (ENE), which is prepared by the
So far, the total balance since the beginning of the health crisis in National Statistics Institute of Chile (INE).
March 2020 has reached 1.36 million infections and 28,928 deaths.
By mid-May, cases began to rise again. This could affect future
economic and health estimates.
45. Coronavirus cases. Our World in Data.
25Discretionary Fiscal Response to the COVID-19 crisis in Selected
Economies (%GDP)46
12 11.4
10 8.8
8.2
8 7.3
6.2
5.7
6
3.9 4.1
4
2 1.8
2 1.2
0.7
0
Argentina Brazil Chile Colombia Mexico Peru
Additional spending and forgone revenue Equity, loans, and guarantees
Percentage of people who have received at least one dose of the COVID-19
vaccine47
55%
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
12/24/2020 1/24/2021 2/24/2021 3/24/2021 4/24/2021
Chile Uruguay Argentina Brazil Mexico
Colombia Bolivia Ecuador Peru
46. Fiscal policy responses to COVID-19. International Monetary Fund.
47. Vaccinations. Our World in Data.
26Why EY?
We are constantly investing
and updating our capabilities
to bring the best technology
to our clients
EY wavespace™ teams bring Our goal is to help you
the right people together and discover opportunities and
give them the tools and mindset obtain predictive information
to think differently, deconstruct that will help you make better
challenges and develop decisions.
solutions – faster.
Business intelligence
EY wavespace™ is a global network of growth and innovation & Big Data
centers helping clients navigate the age of transformation.
They are physical and digital spaces in which companies can
imagine and develop new ways of working and business models.
Learn more about EY wavespace™ at ey.com/wavespace
Analytics & Data Science
Video Analytics
I+D+i
27Why EY?
We develop and bring
you the best tools for
your business
At EY, we have developed a series
of interactive tools to work with
our clients and support them in
their growth, risk and performance
improvement strategies.
EY Benchmark TM EY Helix TM
Application that uses metrics and market parameters Global audit analytics platform that analyzes the
to help identify opportunities for our clients. entire universe of data, not just statistical samples
allowing analytics to be embedded into every
EY Growth Navigator TM significant aspect of the audit.
Interactive application that allows a company to
benchmark against leading practices and define Smart Exporter TM
actions to achieve market leadership. Program that automates data extraction in ERP
systems.
EY Growing Beyond Borders TM
Interactive tool that displays socio-economic data on EY Team Connect TM
geographic maps, allowing a better understanding of Digital environment that allows safe interaction with
the risks and opportunities of a cross-border strategy. the EY team.
EY Process Depot TM Drones
Database of processes, risks, controls, KPIs, etc., The use of drones reduces inventory taking errors
classified by industry and by area. and backs up the data in the cloud.
EY Prime TM EY Tax News Update TM
EY Process Depot designed specifically for the mining Subscription portal for tax news worldwide, where
industry. clients select the topics and countries of their
interest.
EY Excelerator 2 TM
Real-time platform & source for methodologies. EY @SisTax TM
Supports rigorous method develpoment process Software that facilitates the generation and sending
based on Unified Methd Framework (UMF) of information to be presented to the Internal
Revenue Service, making the process more efficient.
EY DRA TM
Tool to assess how prepared clients are for digital EY Tax Interact TM
transformation. Portal that allows an interaction between the tax
departments of the companies and the EY teams.
EY Canvas TM
Global audit platform, which provides full connectivity
and real-time audit tracking for clients.
28Why EY?
We are passionate about
supporting entrepreneurship
and building a better working
world
At EY, we launched EY Ripples, a global corporate
responsibility initiative which focuses on the three
areas where we identified that we can have the
greatest social impact.
Supporting Supporting the next generation, with an emphasis on those who are under-resourced,
the next developing the mindsets and equipping them with transferable skills they need to find and
keep meaningful work in this new era of transformation.
generation
Working with Helping scale small and growing business that drive progress towards one or more of the UN
impact Sustainable Development Goals, tackling inequality, driving sustainable growth around the
world. and empowering people to change their lives.
entrepreneurs
Accelerating To accelerate environmental sustainability, EY works to drive adoption of behaviors,
technologies and business models that protect and regenerate the environment while
environmental unlocking economic opportunity. EY people, clients and collaborators can contribute to
projects focused on environmental research, promotion of the circular economy and reduction
sustainability of carbon emissions and plastic usage.
Our goal is
ambitious: As part of our sustainability strategy:
EY announced its commitment to
be carbon negative in 2021 and
net zero in 2025
We plan to reduce absolute emissions by 40%.
Along these lines, we will launch new sustainable
solutions focused on helping companies create
value from sustainability.
EY Ripples
29Chile’s
Investment
Scenario
30.
Introduction to the
Investment Scenario
in Chile
Chile is one of the most competitive, stable and open economies in
Latin America, and stands out as an important destination for direct
foreign investment in the world. In addition, it is well known for its
low level of corruption, its robust institutions, and healthy
macroeconomic figures. As a result, it is one of the countries with
the greatest freedom to invest and do business.
Foreign investors can do business in Chile as individuals or through
entities governed by the Code of Commerce and other legal
regulations. It should be noted that there are no restrictions
regarding the minimum or maximum amount of capital that any
type of company may possess.
Our country has also established an attractive legal framework for
foreign capital, whose pillars are economic freedom, non-
discriminatory and non-discretionary procedures.
31Doing Business48
Foreign investors can do business in Chile as individuals or through • Oversight: Open Stock Corporations must register with the
entities governed by the Commercial Code and other applicable Registry of Securities Issuers and are subject to oversight by
legal standards. The types of entities most often used to do the Financial Market Commission (CMF - Comisión para el
business in the country are detailed as follows: Mercado Financiero). Closed Stock Corporations are not subject
to oversight.
Stock Corporations (S.A.) • Transfer of shares: There is no legal limitation to the transfer of
shares.
They are composed of shareholders that raise common capital. • Reserved business: There are certain businesses that are
Decisions are adopted through shareholders’ meetings and they are reserved for stock corporations and which are overseen by the
managed by a board of directors. CMF or another sectorial Superintendency (banks, insurance
companies, public works concessionaries, general funds
administrators, etc.).
Characteristics:
• Shareholders: Formed by a minimum of 2 shareholders, with no Limited Liability Companies
maximum number of shareholders.
• Types: Stock corporations can be classified as open or closed. Limited liability companies are one of the most common business
• Open Stock Corporations (S.A.A.): Those that (i) offer their formats used by individuals and legal entities that carry out
shares to the public, (ii) have more than 500 shareholders, or business in Chile.
(iii) 10% of their capital is held by a minimum of 100
shareholders (excluding individual shareholders that exceed Characteristics:
such percentage).
• Closed Stock Corporations: All the rest of stock corporations • Partners: They are formed by a minimum of 2 and a maximum of
that do not meet the criteria for Open Stock 50 partners, which can be national or foreign, residents or not,
Corporations(S.A.A.). individuals or legal entities.
• Liability: The liability of the shareholders is limited to the • Liability: The partners limit their responsibility to the amount of
amount of their shares. contributions made or up to a higher sum as long as it is
• Administration: They must have a board of directors, composed indicated, without any minimum capital requirement.
of at least three essentially revocable members, that appoint a • Administration and oversight: The object, administration and
manager and the chairman of the board. oversight of the company can be freely agreed upon by the
partners, except for operations reserved by law for Stock
Corporations (S.A.).
48. Author: Ignacio Pérez
32• Transfer of equity rights: Unanimity is required for the transfer Branch or agency of a foreign branch
of equity rights.
To establish branches of foreign companies in Chile, there is no
Individual Limited Liability Company need for formal approval from the government. A legal
representative must be established on behalf of the foreign
An individual can acquire the status of a legal entity under the company, who must legalize certain documents before a Chilean
figure of an Individual Limited Liability Company (E.I.R.L.). Equity is Public Notary. These must be written in the original language and
limited to what is stated in the deed and the proprietor only be accompanied by a Spanish translation. The documents are
responds with their personal property up to the capital contribution detailed as follows:
to the company and the company responds with all its assets.
• Proof that the company is legally established abroad.
EIRLs can carry out all types of civil and commercial transactions, • Certification that the company exists.
except for those reserved by law for Stock Corporations (S.A.). • An authentic copy of the company’s current bylaws.
• A general power of attorney issued by the company to the legal
Joint-stock Corporation (SpA) representative that will represent it in Chile.
This is a variation of stock corporations and are governed primarily This power of attorney must clearly establish that the legal
by their bylaws, and their shareholders have quite a bit of freedom representative acts in Chile under the direct responsibility of the
in the establishment of their provisions. In the absence of bylaws or company and with ample powers to be able to act on its behalf.
of special standards that govern this type of companies, they are
governed by the standards for closed stock corporations. Likewise, the legal representative must sign a public deed on behalf
of the company.
Characteristics:
He/she must subsequently register an extract of the deed in the
Commercial Registry and publish such extract in the Official
• Shareholders: Formed by a minimum of 1 shareholder. The
Gazette.
company must be transformed into a stock corporation and
register with the CMF if it meets any of the qualifications to
make it an open stock corporation.
• Liability: The liability of the shareholders is limited to the
amount of their shares.
• Administration: The administration of an SpA can be freely
agreed upon by its shareholders in its bylaws.
• Oversight: In the same manner as closed stock corporations,
SpAs are not subject to oversight by the CMF.
• Transfer of shares: There are no legal limitations to the transfer
of shares.
33Tax Regime49
On February 24, 2020, Law No. 21,210 on "Tax Legislation
Modernization" was published in the Chilean Official Gazette. This Tax withholdings on remittances abroad:
law establishes a new Income tax regime in Chile, which became
effective from January 1, 2020 onwards. Dividends 35% (c) (d)
Interest 4/35% (e)
Below are some of the most important modifications introduced by
this law, which should be taken into consideration when investing in Royalties on patents, trademarks 0/15/30% (f)
Chile. formulas and others
Technical services rendered 15/20% (g)
Current tax regime abroad
The administration, inspection and collection of the main taxes are Other payments and 35% (h)
the responsibility of the Internal Revenue Service (SII). Its main compensation for services
responsibilities are to control tax evasion and to collect taxes
efficiently.
Operating losses (years)
The main Income Taxes and their tax Carry-back N/A
rates are as follows: Carry-forward Indefinite
First Category Income Tax 10% - 27% (a)
(capital income) a) As a general rule, the corporate income tax rate is 27%. In the case
of certain smaller companies or entities without an owner
Capital gains tax 0 - 10% - 27% - 35% (b) (foundations, unions, etc.) the income tax rate will be 10% on a
temporary basis during business years 2020, 2021 and 2022.
b) As a general rule, capital gains are considered as ordinary
income. There are some exceptional situations regarding
certain goods (for example, sales on the stock exchange) and
natural persons (certain individuals). Depending on the taxpayer
tax regime, capital gains could be subject to a corporate income
tax rate of 10% or 27%.
49. Authors: Felipe Espina, Ignacio Pérez
34Capital gains are subject to a 35% withholding tax in the case However, if shareholders are legal residents in countries with which
of non-resident taxpayers. Finally, capital gains from publicly Chile maintains agreements to avoid double taxation, they are
traded stocks might not be subject to income taxes when certain entitled to a 100% tax credit for having paid the company’s Corporate
requirements are met. tax, which results in a personal tax rate of 35%.
c) Dividend distributions between Chilean companies are not
subject to corporate income taxes, although in certain cases Currently, Chile maintains double taxation avoidance agreements
they must be incorporated into the taxable base of the with 33 jurisdictions including several countries in Europe, North and
recipient company. South America and Asia. This tax benefit is even applicable to
d) If the recipient of a dividend is a non-resident, dividends will be agreements that were signed up to December 31, 2019 (United
subject to Additional Tax (a type of withholding tax) at a 35% States and United Arab Emirates).
rate. Any First Category (corporate) Income Tax that has
already been paid can be used as tax credit against this The Corporate taxable base includes all income, with some minor
Additional Tax, in percentages that vary depending on whether exceptions (e.g., government incentives). All costs and expenses that
there is an agreement in force to avoid double taxation are necessary for generating income (allowed expenses) can be
between Chile and the country where the beneficiary of the deducted from the Corporate taxable base. Taxable income includes
dividend is a resident. that which is generated from all transactions, asset sales, and other
e) Although 35% is the general Additional Tax or withholding tax business activities.
rate, this could be reduced to 4% if the payment is made to
international banks or foreign financial institutions. Interest on One of the requirements for expenses to qualify as deductible is that
credits or financing between related parties subject to a they must be "necessary to produce income", either in the same year
withholding tax rate that is less than 35% must be reviewed to or in future fiscal years. In addition, they must be directly related to
determine compliance with excess indebtedness or the corporate purpose.
undercapitalization rules (“thin cap rules”) on the part of the
Chilean debtor entity. It is important to keep in mind that the authorized expenses in favor
f) In certain cases (invention patents, models, computer of taxpayers who reside abroad will only be deductible to the extent
programs), the general tax rate of 30% can be reduced to 15%. to which they have been paid and that the applicable withholding tax
Exceptionally, certain royalties may be exempt from has been duly declared and paid.
withholding tax (as in the case of standard software).
g) The general tax rate is 15%, unless the beneficiary of the As mentioned above, the Corporate tax rate for smaller companies or
income is a resident who has a preferential tax regime, in entities without an owner (foundations, unions, etc.) is 10% on a
which case the tax rate increases to 20%. temporary basis during business years 2020, 2021 and 2022. When
h) General withholding tax rate for payments made from Chile the shareholders or directors of these entities distribute dividends or
abroad. withdraw profits, 100% of the corporate tax paid by the entity may be
used as a tax credit against any personal tax due.
1. Corporate tax (First Category Income Tax)
Tax loss carry back system
Tax base determination
During the 90s and until 2014 it was possible to deduct tax losses
As a general rule, the Corporate tax rate is 27%, which is applicable against retained earnings from previous years, this mechanism is
to net taxable profit. Companies based in Chile are subject to this called “carry back of losses”. Since then, continuous legislative
tax for their worldwide source profits. changes have tent to limit its use.
Annual profits are subject to income tax at two stages. Firstly, a Likewise, in 2001, limitations were incorporated into loss
company’s profits are subject to the 27% Corporate tax. deductibility when an entity carrying on losses changed ownership,
Subsequently, shareholders’ (owners’) income will be taxed after under certain requirements.
distribution or withdrawal. During this stage, shareholders’ income
will be subject to Additional Tax (withholding tax). As part of the 2014 tax reform, the possibility of deducting losses
against retained earnings from previous years was eliminated, except
When a company’s shareholders are not Chilean residents, the in the case of results consolidation from the same business group,
Additional Tax rate is 35%. When the shareholders are individuals through the distribution of dividends or profits.
residing in Chile, they pay a personal tax called “Global
Complementary Tax”, whose tax rate is proportional and Finally, the Tax Legislation Modernization Law established the
progressive (depending on the volume of income withdrawn), with a definitive elimination of tax loss deductibility against distributed
maximum rate of 40%. dividends. Before this reform, Chilean companies with retained tax
losses that distributed dividends or agreed to withdraw profits from
In both cases, 65% of the Corporate tax paid by the company may Chilean subsidiaries could offset these retained losses and recover
be credited against these personal taxes (Additional or Global the Corporate tax paid by the subsidiary that distributed the dividend.
Complementary), in which case, foreign shareholders are subject to This right was gradually eliminated as detailed as follows:
a 44.45% final tax rate on dividends.
3590% of the losses will be imputed to the amounts met, even in the case of related parties. In addition, interest could be
2020 to be distributed when they are subject to personal subject to reduced withholding tax rates (10% or 15%) by virtue of an
taxes agreement to avoid double taxation. In both cases,
undercapitalization rules apply.
80% of the losses will be imputed to the amounts
2021 to be distributed when they are subject to Basically, undercapitalization rules states that in the event of
personal taxes excessive indebtedness (i.e., when total indebtedness is three times
70% of the losses will be imputed to the amounts higher than the company's tax assets) any interest, commissions or
2022 to be distributed when they are subject to payments made abroad for debts with related parties are subject to a
personal taxes 35% effective tax rate. For the purposes of indebtedness calculation,
all debts with local or foreign related parties must be considered.
50% of the losses will be imputed to the amounts
2023 to be distributed when they are subject to Passive income tax regime abroad (CFC Rules)
personal taxes
0% of the losses will be imputed to the amounts This regime establishes the obligation to recognize passive income
2024 to be distributed when they are subject to received or accrued by entities controlled abroad, on an accrual basis.
personal taxes
Transfer Prices
In Chile, the rules on transfer pricing have been in force since 2013,
2. International Taxation which follow the guidelines of the Organization for Economic
Cooperation and Development (OECD).
Tax credit regularization between countries with or without
an agreement to eliminate double taxation Under these rules, cross-border transactions between related parties
must be performed at market conditions (arm's length transactions).
Before the publication of the Tax Modernization Law, Chilean tax
legislation allowed the possibility of using income taxes paid abroad Transfer price adjustments made by the authorities are subject to a
as tax credits against income taxes to be paid in Chile, depending on 40% tax (fine).
whether an agreement to eliminate double taxation was in force
between Chile and the country where the income tax was paid. If such Preferential tax regimes
agreement existed, a tax credit up to 35% on the net taxable income
from foreign sources could be obtained (against Chilean taxes), with To be considered a jurisdiction with a "preferential tax regime", at
certain adjustments. If such an agreement did not exist, the tax credit least two of six requirements established by law must be met. OECD
dropped to 32%, among other differences. With the Tax countries are not considered to have preferential tax regimes.
Modernization, this tax treatment has been standardized to 35%.
Transactions with jurisdictions that have preferential tax regimes are
However, in the case of countries with no such agreement in force, it subject to higher withholding tax rates, especially certain payments
is only possible to use (i) taxes on dividends (withholding or corporate abroad (for services and royalties). In addition, a presumption of a
taxes paid by the company that distributes such dividends), (ii) relationship is applied in certain circumstances (transfer prices,
income taxes paid by agencies or permanent establishments, (iii) undercapitalization rules, indirect disposal and passive income).
income taxes on the use of intangible assets such as trademarks,
patents or formulas, (iv) taxes on services classified as exports, (v) Indirect Disposal
taxes on income from dependent labor and, (vi) taxes on passive
income under article 41 letter G of the Chilean Income Tax Law as a Capital gains generated by the indirect disposal of Chilean underlying
tax credit against Chilean income taxes. assets are subject to taxation in Chile if certain circumstances are
met. These relate to the value of the entity that is transferred abroad
Undercapitalization rules for tax credits from foreign or the Chilean entity that is transferred indirectly.
related parties
Once an indirect transfer has been carried out, the capital gain is
As a general rule, interest paid by Chilean entities to entities taxed at 35%. These operations must be duly reported to the tax
domiciled abroad are subject to a 35% withholding tax, or at a lower authorities.
tax rate set up by an agreement to avoid double taxation.
In any case, Chilean companies or indirectly transferred permanent
Interest paid to international banks or foreign financial institutions establishments are jointly and severally responsible for the payment
can benefit from a reduced tax rate of 4% if certain requirements are of the taxes due by the foreign transferor.
36Tax Incentives 4. Miscellaneous
Agreements to avoid double taxation:
• Chile has entered into agreements to avoid double taxation with Substitute Tax - Transitory Regime
Argentina, Australia, Austria, Belgium, Brazil, Canada, China,
Colombia, South Korea ,Croatia, Denmark, Ecuador, Spain, Taxpayers who have retained earnings at the end of 2020 that were
France, Ireland, Italy, Japan, Malaysia, Mexico, Norway, New generated up to December 31, 2016, may choose to pay a 30%
Zealand, Paraguay, Peru, Poland, Portugal, United Kingdom, income tax (instead of personal taxes) on these retained earnings
Czech Republic, Russia, South Africa, Sweden, Switzerland, that have not been withdrawn. The corporate tax paid by the
Thailand and Uruguay. Chilean company can be used as a tax credit. The effect being that
• In addition, there are currently agreements signed but not in force once this substitute tax has been paid, the retained earnings may
with the United States, the United Arab Emirates, the be withdrawn and distributed without affecting other income taxes.
Netherlands and India. This benefit can be used between October 1, 2019, and April 1,
2022.
Taxes on entities not domiciled in Chile
Incentives for investment and savings
Chilean source income received by a non-resident who does not
have a domicile in Chile is generally taxed with the Additional Depreciation mechanisms: The main depreciation mechanisms are
(withholding) Tax, at a rate of 35%. two: normal depreciation (linear depreciation over the useful life of
the assets) and accelerated depreciation (the asset's useful life is
As explained before, dividends sent abroad are taxed with a reduced to one third). In addition, there are other mechanisms
withholding tax of 35%. In addition, 65% or 100% of corporate taxes available to small and medium-sized companies.
paid by the Chilean company can be used by foreign owners as a tax
credit against their personal withholding taxes, depending on There is a temporary possibility of using an even more accelerated
whether the beneficiary resides in a country which Chile has an depreciation mechanism, whereby the useful life of new or imported
agreement with to avoid double taxation in force. PP&E assets can be reduced to 10% during the first year.
Returns of capital are not taxable, unless they are attributable to Likewise, it is possible to amortize 100% of the value of intangible
earnings retained by the company. goods whose destination is related to the interest, development or
maintenance of the company or business of the entity. This benefit is
transitory and can be applied to the acquisition of the following goods:
3. Value Added Tax (VAT)
a) Industrial property rights regulated by Law No. 19.039;
VAT is levied on sales and imports of goods, and the provision and b) Intellectual property rights regulated by Law No. 17.336; and
use of services at a rate of 19%. c) Plant varieties regulated by Law No. 19.342.
VAT follows the tax debit/credit system, e.g., the VAT paid on These benefits can be used between June 1, 2020, and December 31,
purchases is offset with VAT on sales. VAT must be declared and 2022.
paid monthly. Its amount is determined as the difference between
VAT’s tax debit and tax credit. In addition, any remaining tax
Personal taxes (Second Category Income Tax and Global
difference can be used in subsequent periods.
Complementary Tax)
Currently, VAT is mainly applicable to all routine sales of personal
property, real estate (either new or used) and certain services. The Second Category Tax is applied to income from dependent and
subordinate work, it is progressive marginal, monthly withholding by
the employer, reaching a maximum marginal rate of 40%.
VAT on foreign digital platforms
The Global Complementary Tax is applied to income derived from
The Tax Modernization Law establishes that digital services will be
professional and independent activities. It is an annual declarable tax
taxed with VAT (19% rate), which will be charged to providers of
whose maximum rate is 40%.
these services who are domiciled or resident abroad. These
services include digital brokerage, entertainment, software,
platform, and advertising services. Customs Regime
The Law establishes legal presumptions regarding when it will be As a general rule, imports are subject to the payment of an “ad
understood that these services are “provided in Chile”. valorem” duty (6% on the CIF value) and VAT (19% on the CIF value).
Foreign providers of these services must register in Chile as VAT Exceptionally, imports of capital goods may be exempted from duties
payers. In turn, credit card issuers can be withholding agents of any and VAT under certain requirements.
taxes due.
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