Home » Chile. Information on Residency for tax purposes

Chile. Information on Residency for tax purposes

Chile, or the Republic of Chile, is one of the most prosperous countries in South America. It is recognized as a leader in terms of development, competitiveness, globalization, economic freedom, low level of corruption, etc. The country refers to the high-income group, with a GDP per capita of $12,612, and a population of about 18,95 million people. The economy of Chile stands out for its stability. It is based on such industries as forestry, copper mining, fishing, winemaking, and tourism. As a result of reforms and new laws, Chile has managed to attract foreign investment, which has played a crucial role in the economic growth and development of the country over the past decade.

  1. Ease of Doing Business in Chile

The Republic of Chile has an attractive and dynamic business environment for investors, not only because of its political and economic stability, but also due to its trade openness, legal security, and great growth prospects. Furthermore, Chile has trade agreements with China, Canada, Brunei, Japan, Mexico, South Korea, the European Union, Singapore, and New Zealand. Today, the country is actively working on bilateral trade agreements.

It is also important to mention such advantages of doing business in Chile as a flexible tax system, good standard of living, and availability of necessary infrastructure.

According to the Doing Business 2020 report, ease of doing business ranking in Chile is: 

  • Rank: 59
  • DB score: 72.6

The ease of doing business score (DB score) serves as the basis for ranking economies on their business environment and shows an economy’s absolute position relative to the best regulatory performance, while the ease of doing business ranking is an indication of an economy’s position relative to that of other countries’ economies. 

  1. Business Taxes in Chile

The tax structure in Chile consists of a small number of direct and indirect taxes, as well as a minimum number of tax exemptions for exporters. In terms of the level of elaboration of tax legislation, organization of tax authorities’ activities, and the process of tax collection, Chile is a leader not only among developing countries but also among a number of Western European countries. Moreover, Chile has double tax treaties with 23 countries.

There are tax payments, also known as the total number of taxes, paid by businesses (plus electronic filing). This tax is counted as paid once a year even if payments are more often. The World Bank research shows that the tax payments number in Chile is 7.

  1. Income tax

An income tax is a tax imposed on individuals or business entities (taxpayers) in respect of their income or profits earned. Income tax rates may vary by the types or characteristics of the taxpayer and the type of income.

As for Chile’s Personal Income Tax Rate, it is 40% (max).

  1. Corporate tax

A corporate tax (also called corporation tax or company tax) is a direct tax imposed on the profits of a corporation. If you have a business registered in Chile, you must pay Chilean corporate income tax on all worldwide income. However, if your company is registered abroad but operates in Chile, then you must pay corporate income tax only on profits generated from Chilean sources. The corporate income tax (CIT) rate in Chile is 27% and the Dividend Tax rate is 35%. Nevertheless, there is no capital gains tax in this country.

As we have mentioned above, there are indirect taxes and the value-added tax (VAT) is among them. It means a consumption tax is included in the cost of services and goods whenever a value is added at any stage of the supply chain. The VAT rate in Chile is 19%.