Main taxes in Chile:
1. All taxes in Chile are of a national nature. There are no significant municipal, provincial or regional taxes.
The main sources of national tax revenue are:
1), corporate and personal income tax
2), value-added tax (IVA)
3), customs duties
4), stamp duty
In addition, tax laws include real estate tax, inheritance and gift tax and some other special sales taxes.
2. Agreement on the Avoidance of Double Taxation
The Agreement on the Avoidance of Double Taxation signed with Argentina is based on the principle of exemption. Income taxed in the country of production, therefore, residence in Income earned by Chilean residents in Argentina is taxed only in Argentina.
For the purpose of calculating the supplementary tax on income of Chilean residents, income from Argentine sources is included, but only to determine the progressive rates of taxation.
Other agreements are based on the OECE (Organization for Economic Co-operation and Development) model and are based on the credit principle, which prioritizes the taxation of income based on the principle of residence of the investor.
In addition, Chile has signed an agreement with Duoduo on the avoidance of double taxation on international shipping, shipping goods and passengers.
3. Royalty tax
According to the provisions of the LIR, all royalties paid to foreign countries are subject to a 30% withholding tax, except those who have signed a tax agreement with Chile to avoid it. Persons in countries with double taxation agreements pay royalties in addition to tax.
However, starting from January 1, 2007, certain royalties enjoy a tax rate reduced to 15% (patents, utility models, industrial design use and development, integrated circuit layout design, new plant varieties and computer programs on any type of hardware).
Fees paid to overseas companies not resident in Chile for advice, reports or drawings for engineering or technical work, professional or technical services, are subject to a 15% withholding tax.
Payments to countries considered tax havens do not apply to this reduced rate.
4. Investment companies
The special tax system for investment companies is an investment vehicle for foreign investors who invest in third countries without Chilean income tax support.
The main advantage of an investment company is that its legal person does not have residence in Chile and will not need to pay any income tax on the income from abroad generated from investment or provision of services or capital gains. It will only pay income tax from Chile in this country. .
At the same time, shareholders residing abroad do not need to pay income tax on profits remitted by the company to them.