Chilean Accounting and Tax Compliance Requirements
The legalities for running a business in Chile are similar to those of other Latin American countries. However, there are a few differences concerning taxes, documentation, and licensing that are important to note in your research of Chilean business practices.
Chile has four main taxes: Value Added Tax (VAT), Stamp tax, Customs duties, and corporate and personal income taxes. Other tax rates and rules are listed below:
- The Corporate income tax rate is 20% on worldwide income and capital gains
- For the first 3 years, non-residents companies only pay taxes on their income from Chile. After this point, they are also taxed on worldwide income.
- Value Added Tax is filed monthly at 19%.
- Dividends from a resident to a non-resident company are taxed at 35%, resident to resident is exempt.
- Withholding tax- 35% on interest payments and 30% on royalties.
- Property tax- 1% for rural properties and 1.2% for urban properties.
Accounting Regulations in Chile
Each company is responsible for filing the proper financial documents and ensuring that they are delivered to the correct legal entities. It will be simpler to do so with the following tips:
- The deadline to file yearly tax returns is April 31st.
- Banks, financial institutions, pension plans, public-traded companies, and insurance companies are the only ones required to file audited statements.
- Resident businesses can make money transfers without exchange controls.
- Chile has signed Double Taxation Treaties with 28 countries to reduce withholding taxes on payments made abroad.
- These numbers are an estimation and will need to be catered to your specific business in Chile.
Each country outlines their rules for how businesses should be run and the proper way to make that happen in the quickest way possible. Adhere to Chile’s specific guidelines for its companies by reading below:
- A Chilean company must have at least one permanent resident of any nationality.
- Each company must provide relevant company details on its annual return, such as its principal address and names and addresses of all directors.
- A registered office located within Chile is required.
- Prior to starting business operations, a company must have a Chilean Tax Identification Number (RUT) and be registered for VAT.
- Having a company secretary is not required but is recommended.
- All employees must register with a professional accident insurance in Chile.
- Every company must appoint a legal representative who resides in Chile.
- A working license needs to be obtained from the Chilean city or town in which the business will reside. A small fee for the company’s share capital pays for this license.
- After the company is formed, a business start-up document must be submitted to the National Tax Service (SII).
Anticipating Your Chilean Company’s Tax and Legal Needs
It is an important step in the process of creating your Chilean business plan to anticipate the legal needs of your company before embarking on the journey. Different licenses and registrations are required based on your company’s activities and can include permits for health, environment, and the city of your company’s location.
Source: Biz Latin Hub