Working with an international tax accountant in Chile will provide you with essential support on tax returns and administration. An international tax accountant with knowledge of Chile’s tax legislation will be able to limit a company’s tax burden while also ensuring it remains in good standing with tax authorities.
Doing business in Chile is an appealing option for international companies looking to expand into Latin America. With an economic freedom score of 76.8, the Andean nation is positioned as the freest economy for doing business in the region, according to the 2020 Index of Economic Freedom. While the country experienced some social upheaval in late-2019, over recent decades Chile has maintained a consistently stable economic and political environment, with excellent growth prospects.
Chile has a fully digital cloud compliance system, allowing all ledgers, entries, and corporate balances to be stored and retrieved digitally on the tax authorities’ severs. Nevertheless, embracing Chile’s tax system could be a challenging experience for foreign executives. Read on to understand some of the main corporate taxes in the country and the importance of engaging with an international tax accountant in Chile.
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Working with an international tax accountant in Chile
The following taxes appear among those that an international tax accountant in Chile can provide comprehensive advice on:
Complementary Global Tax (Impuesto Global Complementario): a personal, global, progressive, and complementary tax that is determined and paid once a year by natural persons. Note that the tax rate varies by income, as shown in the following table.
| Annual income | Rate |
| $9,658.72 | Exempt |
| $21,463.83 | 4% |
| $35,773.04 | 8% |
| $50,082.26 | 13.5% |
| $64,391.48 | 23% |
| $85,855.31 | 30% |
| $107,319.13 | 35% |
| Above | 40% |
Additionally, 65% of corporate income tax can be used as a credit to lower the tax base for final/withdrawal tax.
Additional Tax (Impuesto Adicional): a withholding tax, which is levied on the income or benefits obtained by taxpayers that have neither domicile nor residence in Chile, but whose income source is within the country. The general tax rate is 35 percent, however, residents of countries with double taxation agreements with Chile can credit 100 percent of the corporate income tax paid in their jurisdiction of residency.
Transfer prices: all transfer prices must be in line with the “arm’s length principle” employed by Chile. This means that for all related entities, any exchange of goods or services between them must take place on an equal footing so that both can withstand legal scrutiny.
VAT (Value Added Tax): in Chile, all imported products must pay a VAT based on the Cost Insurance and Freight (CIF) value plus the ad-valorem duty. Some selected products must pay higher excise duty (e.g. tobacco, luxury goods, or alcoholic beverages). Regional trade agreements can ensure exemption from ad-valorem tariffs or preferential rates.
Double taxation treaties: Chile has reached double taxation treaties with more than 30 key economies across the world. This gives the South American country access to over 64 international markets.
Internal company reporting
An international tax accountant in Chile that has experience working with international clients should be able to provide you with all reporting materials and accounting documentation in English, which can be vital for internal oversight of your operations, and will feed into future decision making.
At Biz Latin Hub, all documentation is provided to clients in English as standard, as well as in the official language of the jurisdiction.
An experienced international tax accountant in Chile will also be able to provide comprehensive ongoing feedback related to your taxes, to facilitate proper analysis and future planning.
Biz Latin Hub can be your international tax accountant in Chile
While Chile oversees a pro-business regime that encourages foreign investment, it still makes sense to contract an experienced local partner who can guarantee you get the best deal for your enterprise. At Biz Latin Hub, our team of multilingual legal and tax specialists has extensive experience supporting foreign investors with accounting and taxation, company formation, recruitment, and many other professional services in Chile.
Reach out to us now to see how we can help you doing business in Chile.
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