Country Q&A | Law stated as at 01-Nov-2018 | Chile

A Q&A guide to investing in Chile.

This Q&A gives an overview of the key factors affecting inward investment, including information on the jurisdiction’s legal system; key laws and regulatory authorities; investment restrictions; and details of international treaties, customs and monetary unions. The guide also provides information on investor individuals; visa permits; restrictions on foreign ownership; transfer pricing and thin capitalisation rules; imports and import duties; safety regulations and standards for commercial goods and services; structuring and tax incentives; investment guarantees; recent developments and proposals for reform.

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This Q&A is part of the Investing in…Global Guide. For a full list of contents, please visit

1. How does your jurisdiction compare internationally as a destination for inward investment?

Chile has an attractive and dynamic business climate for investors due to its political and economic stability, openness to trade, legal security and excellent growth prospects.

Over the last 40 years, legislation has been transformed to strengthen the economy by promoting both local and foreign investment. A new constitution was enacted in 1980, which included establishing a subsidiary role for the state and protection for private property. Legal actions were created through which the courts will protect constitutional and legal rights. These include:

  • The action for protection (Recurso de Protección). This action is heard before an appellate court.
  • Habeas corpus (Recurso de Amparo).
  • The action for economic protection (Recurso de Amparo Económico). This action guarantees the fundamental right of every person to carry out any lawful economic activity.

In addition, legislation has introduced new institutions and public services that regulate, promote and supervise business operations in Chile.

These legislative changes generally seek to:

  • Ensure and safeguard fundamental rights, by providing redress for unlawful actions or omissions by third parties that affect or threaten any protected fundamental rights. Actions can be brought against public authorities.
  • Establish procedures to ensure that constitutional guarantees are effective.
  • Safeguard the right to freely develop any lawful economic activity.

As a result of this legislation and other regulations, Chile has been able to attract the foreign investment that has played a decisive role in its economic growth and development over recent decades.

The World Economic Forum Competitiveness Report 2016-2017 listed Chile as the most competitive economy in Latin America. Chile is also recognised as one of the top-rated emerging economies worldwide.

In its 2018 World Investment Report, the United Nations Conference on Trade and Development (UNCTAD) identified Chile as the second largest foreign investment recipient in Latin America, after Brazil.

Approximately USD110,964 million flowed into Chile between 2012 and 2017and the total foreign investment announced for Chile as a destination for greenfield projects for 2017 alone was USD905 million. Moreover, with a new business and investment-friendly government, which began its four-year term in March 2018, as well as a higher estimated price for copper ore, foreign direct investment (FDI) inflows are expected to increase, and preliminary results already show a surge of 24.3% compared with the total FDI inflows for 2017. According to the Central Bank of Chile, FDI reached USD8,475 million in the first four months of this year, up by 655% on the same period in 2017, and the highest amount ever for this period since comparable records began (2003).

2. What types of companies are attracting foreign investment into your jurisdiction and what are the most active sectors?

The main sectors attracting foreign investment in recent years have been mining, general services, food, infrastructure, tourism, banking and, particularly in the last few years, renewable energy projects. Foreign companies tend to invest in projects where local financial capacity or experience may not be available. This is particularly the case in the mining, energy and general services sectors.

3. What will be the main factors affecting the market and how do you expect the market to develop?

According to the latest report published by the United Nations Economic Commission for Latin America and the Caribbean (Comisión Económica para América Latina y el Caribe (CEPAL)) in July 2018, the main factors that will be affecting the market in 2018 and the near future are the change in government, a steady increase in copper prices and the materialisation of investments in several infrastructure projects, particularly renewable energy projects, that were in early development stages during the preceding years.

After the structural reforms enacted by the previous government, Sebastián Piñera’s government (which came to power in March 2018) has announced several measures focussing on economic growth and developing policies to facilitate and attract international business to Chile, including simplification of the current tax regime. This reinforces Chile’s reputation as a developing economy distinguishable by three factors: the availability of talent and highly skilled workers, political and economic stability, and infrastructure.


4. Please briefly outline the government and legal system.

Constitutional system

Chile is a representative democratic republic, in which the president is both head of state and head of government.

The constitutional system is divided into three clearly differentiated and independent powers:

  • The executive power.
  • The legislative power.
  • The judicial power.

The executive power. National and regional governments exercise the executive power.

The General Comptroller Office of the Republic (CGR) controls the administration of the state under the authority of the constitution. CGR is an independent body, whose primary purpose is to ensure that administrative acts are lawful. It checks that the different organs of the administrative public system are acting within the scope of their respective mandates and following the procedures and administrative principles provided by law.

The legislative power. The legislative power is vested in the government and the two chambers of the National Congress:

  • The Senate, consisting of 50 senators (38 before 2017), who are elected for eight years.
  • The Chamber of Representatives (diputados), consisting of 155 representatives (120 before 2017) who hold their positions for four years.

The 1980 constitution introduced a binomial political system, still in force for presidential elections. In practice, voters have a choice between one of two coalitions: a more conservative, right wing coalition (currently in government), and a more liberal, left wing coalition.

In 2015, Law 20,840 replaced the binomial political system for parliamentary elections with one of a proportional and inclusive nature (also known as the D’Hondt system), which is intended to strengthen representation in Congress, and which established a greater number of parliamentary seats as well as greater female participation, and reduced the barriers for the creation of political parties.

The D’Hondt system is a mathematical method for allocating seats that allows the number of elected positions assigned to the candidates to be in proportion to the votes obtained.

The judicial power. Self-governing, independent, courts exercise the judicial power. These include:

  • The ordinary courts system, which has specialised courts for civil, family, criminal, environmental, public bids, anti-trust, tax and customs and labour matters.
  • The Court of Appeals and the Supreme Court. The judges on the Supreme Court are appointed by the president and ratified by the senate from a list of candidates prepared by the Supreme Court itself. The 21 court members elect the President of the Supreme Court.
  • Resolutions adopted by the ordinary courts can be reviewed, modified or revoked by a higher court.
  • Specialised courts, such as military courts and the Constitutional Court.

Legal system

Chile has a civil law system. It is primarily based on the Civil Code of 1855, the Commercial Code of 1867 and subsequent codes influenced by continental law during the second half of the 19th century.

The main body of law is the Political Constitution of Chile (Constitución Política de la República de Chile) of 1980.

There is a hierarchy of other types of law that fall under the constitution in terms of importance. These are:

  • Laws interpreting the constitution (Leyes interpretativas de la Constitución). A special quorum of three-fifths of both the Senate and the Chamber of Representatives is required to enact, amend or repeal these laws.
  • Constitutional organic laws (Leyes Orgánicas Constitucionales). These regulate specific matters related to the organisation and powers of public entities such as the Congress, the Central Bank, the police, the military and the different public ministries. Mining concessions are granted under these laws. A special quorum of four-sevenths of both the Senate and the Chamber of Representatives is required to enact these laws.
  • Qualified quorum laws (Leyes de Quórum Calificado). These are laws for specific constitutional matters, such as authorising the state and its bodies to participate in economic activities and for governing the secrecy and decisions of public entities. An absolute majority of both senators and representatives is required to enact these laws.
  • Regular laws dealing with matters that are not reserved for the laws set out above. Regular laws are approved by simple majority of both chambers of congress.
  • Ministerial regulations (Reglamentos). The executive power enacts ministerial regulations through its different ministries. It is quite common for laws to refer to a ministerial regulation for the detailed provisions on a specific matter. A law created by congress may have no practical effect until a specific ministry or other public entity makes the necessary regulation. For example, tax laws often refer to regulations of the Internal Revenue Service (Servicio de Impuestos Internos). Similarly, a ministerial regulation or law may require a municipal decision or resolution (Decisiones y Resoluciones Municipales) to regulate matters such as the granting of licences, permissions or authorisations to operate some businesses; for example, restaurants or liquor stores.

5. What are the key laws and regulatory authorities governing foreign investment in your jurisdiction?

Foreign investors must use one of two mechanisms to bring capital into the country to make an investment:

  • Chapter XIV of the Central Bank’s Compendium of Foreign Exchange Regulations (Chapter XIV).
  • Direct Foreign Investment Law (Law 20,848, or DFI Law), in effect as of 1 January 2016.

Chapter XIV

In principle, any person can freely carry out foreign exchange transactions (Article 39, Organic Law 18,840, Central Bank of Chile). However, the Central Bank has the power to impose certain requirements and limits on these transactions. In 2001, the Bank lifted many of these restrictions and they are unlikely to be reinstated.

At present, the main requirements of chapter XIV are that:

  • Foreign investors report transactions worth over USD10,000 to the Central Bank. Capital contributions from foreign investors must consist only of foreign currency.
  • Some foreign exchange transactions to bring foreign currency into Chile must take place through the Formal Exchange Market (MCF). Commercial banks licensed in Chile and other expressly authorised entities manage the MCF.

Under the Chapter XIV mechanism:

  • Capital and net profits generated by capital investments can be repatriated at any time.
  • Foreign investors are subject to the general tax regime and cannot take advantage of the fixed tax regime.
  • There is no guaranteed right for the investor to access the Formal Exchange Market to buy the foreign currency necessary to remit capital or profits abroad, except for investments on loans made under Decree Law No. 600, Foreign Investment Statute (DL 600) pursuant to foreign investment contracts signed before 31 December 2015.


Even though over 60% of the foreign investment in Chile since 1974 entered the country through the mechanism established by DL 600, as a consequence of the tax reform approved in 2014 by Law No. 20,780, the Foreign Investment Statute contained in the DL 600 was abrogated as from 1 January 2016. Notwithstanding the repeal of the DL 600, Law No. 20,848 guaranteed the full validity of the rights and duties acquired by foreign investors during the lifespan of DL 600. Hence, foreign investors who entered into a contract under DL 600 before 1 January 2016, or who do so during the four years thereafter (the “Transitory Regime”), will maintain their rights and obligations arising from such a contract until their expiration.

At present, the new regime enacted through the DFI Law concerns investments made in Chile of over USD5 million, performed through foreign currencies, tangible assets, reinvestment of earnings, capitalization of credits, technology in its various forms. or credits related to foreign investment or originated on related companies. Additionally, the DFI Law covers investments of over USD5 million that are materialised through the acquisition of a stake in the company receiving investment in Chile (which must be incorporated and governed by Chilean Law), granting the investor, directly or indirectly, at least 10% of the voting rights.

Foreign investors that subscribe to the new regime under the DFI Law may request certification of their investment from the Agency for Promotion of Foreign Investment (Agencia de Promoción de Inversión Extranjera) (APFI), for which they must prove the materialisation of the investment and attach a detailed description of it, including its amount, destination and nature. This certification is granted only after the investment has been executed.

The main considerations for foreign investors under this regime are the following:

  • They have the right to access the official exchange market (commercial banking system) for the purpose of settling the foreign currencies that constituted their investment, remitting profits abroad, and repatriating capital investments. The repatriation of capital may take place once all tax obligations have been fulfilled (the regime established by DL 600 required a one-year wait before remittance).
  • Foreign investors are subject to the common legal regime applicable to local investors.

6. What international treaty organisations and/or economic, customs or monetary unions or free-trade areas is your jurisdiction a member of?

Chile is a member of:

  • The World Trade Organization (WTO).
  • The Asia-Pacific Economic Cooperation (APEC).
  • The MERCOSUR (a sub-regional bloc comprising Argentina, Brazil, Paraguay, Uruguay and Venezuela; its associate countries are Chile, Bolivia, Colombia, Ecuador and Peru).
  • The Organisation for Economic Co-operation and Development (OECD).
  • The Central American Integration System (SICA), as a regional observer.
  • The Pacific Alliance, a regional integration initiative to promote further growth, development and competitiveness of the economies of its members. It was founded in 2011 by Chile, Colombia, Mexico and Peru.
  • The World Intellectual Property Organization (WIPO).

7. What other international agreements apply to foreign investment?

Chile has executed the following international agreements that apply to foreign investment:

  • Free trade agreements: with Australia, Canada, Central America (Costa Rica, El Salvador, Honduras, Guatemala and Nicaragua), China, Colombia, EFTA (Norway, Switzerland, Iceland and Liechtenstein), Hong Kong, Malaysia, Mexico, Panama, South Korea, Thailand, Turkey, the United States and Vietnam.
  • Double taxation avoidance agreements: with Argentina, Australia, Austria, Belgium, Brazil, Canada, China, Colombia, Croatia, Czech Republic, Denmark, Ecuador, France, Ireland, Italy, Japan, Malaysia, Mexico, Norway, New Zealand, Paraguay, Peru, Poland, Portugal, Russia, Sweden, Switzerland, South Africa, South Korea, Spain, Thailand and the United Kingdom.
  • Economic association agreements: with the EU, Japan and P4 (New Zealand, Singapore and Brunei Darussalam).
  • Economic complementation agreements: with Bolivia, Cuba, Ecuador, the MERCOSUR (Argentina, Brazil, Paraguay and Uruguay), Peru, and Venezuela.
  • Partial scope agreements: with India.

8. Are there any visas, permits or other requirements for foreign individuals entering your jurisdiction for business purposes?

In general terms, five types of visa are issued by Chile:

  • Tourist visa.
  • Visa subject to a labour contract.
  • Temporary residence visa.
  • Student visa.
  • Permanent residence.

In addition, a fast-track Visa Tech programme is available for overseas professionals and technicians working for technology companies.

Potential foreign investors must enter Chile under a tourist visa. There is generally no need to obtain the visa before travelling as the immigration authorities can issue the visa on arrival. However, citizens of some countries must obtain a tourist visa before travelling. These visas are available from Chile’s consular offices abroad.

Foreign investors and executives may apply for:

  • Visas subject to a labour contract (Visa Sujeta a Contrato de Trabajo).
  • Temporary residence visas (Visas Temporarias).

Other visas and permits can be obtained in Chilean Consulates or on arrival from the immigration department (Departamento de Extranjería y Migración).

Visas subject to a labour contract

These visas permit the holder to perform remunerated activities for the employer indicated in the contract for which the visa was issued. They are valid for up to two years and can be extended for additional two-year periods. The holder can apply for permanent residence after they have held a visa of this type for two years.

The following items must be attached to a visa application form:

A copy of the applicant’s current passport.

A copy of the applicant’s last tourist visa (Tarjeta Internacional de Entrada y Salida) (if the visa is obtained at an immigration office).

  • Three colour photographs of the applicant.
  • The original employment contract between the Chilean company and the applicant (which must include certain obligatory clauses).
  • A criminal background certificate (if the visa is obtained at a Chilean consulate).
  • A medical certificate (if the visa is obtained at a Chilean consulate).

Certain additional documents relevant to the Chilean employer company are required when the visa is obtained in a Chilean consulate.

Temporary residence visas

Temporary residence visas allow a foreign individual to reside in Chile and perform any legal activity in the country.

Foreign investors and foreign individuals who are doing work for a Chilean company but who are employed by a foreign company can apply for this type of visa.

To obtain a temporary visa, an application form must be sent by certified mail to the immigration department or local consulate, attaching:

A copy of the applicant’s current passport.

A copy of the applicant’s last tourist visa (for applications sent to the immigration department).

  • Three colour photographs.
  • A criminal background certificate and medical certificate (where applications are sent to a consulate). Foreign investors must also file certain documents in relation to the investment being made in Chile.

An accompanying spouse, parents or children, may apply for either of these visas as dependants of the visa holder. In this case, marriage and birth certificates must also be filed.

Applicants of certain nationalities, for example Colombian nationals, must file additional certificates to obtain a visa.

If a visa is being obtained from a consulate, it is important to check the requirements of individual consulates, as these vary.

Visa requests sent to the immigration office, take approximately four months to come through. A provisional permit is granted after about three weeks, however, which allows the holder to work until the full visa is issued.

The cost of visas subject to a work contract and temporary residence visas varies from USD12 to USD620 depending on the type of visa and the nationality of the applicant.

9. Are there any visa waivers or fast-track procedures available for foreign individuals entering your jurisdiction as investors?

No visa waivers or fast-track procedures are available for foreign individuals, except for the Visa Tech programme (see Question 8), which aims to shorten the hiring process and foster entrepreneurship and the productivity of technology services companies in Chile.

However, foreign individuals employed by a foreign company who are entering Chile to work for a Chilean company, may apply for a work permit for tourists (Permiso de Trabajo para Turistas). These permits are granted within 24 hours of filing an application. A permit is granted for 30 days and is renewable for further 30-day periods while the individual’s tourist visa is valid. A tourist visa is valid for 90 days from the date of entering Chile.

A tourist work permit is obtained directly from the immigration office, by filing:

  • An original passport together with a legible copy.
  • A copy of the applicant’s last tourist visa.
  • A letter issued by the Chilean company stating the nature of the relation with the foreign employer company and the employee, and the date that the individual will start working in Chile.

The cost of a tourist work permit is 150% of the cost of a visa subject to labour contract, which varies depending on the nationality of the applicant.

10. What are the circumstances under which an individual becomes liable to pay tax in your jurisdiction? Can individuals be liable for tax on foreign-source income?

An individual is liable to pay tax if the individual either:

  • Is domiciled or resident in Chile.
  • Has Chilean-source income.

Domicile and residence

An individual is deemed to be domiciled in Chile for tax purposes if the individual resides in the country with the real or presumed intent to remain there.

An individual is considered to be resident if he or she remains in Chile for either:

  • More than six months within one calendar year.
  • More than six months in total within any two consecutive fiscal years.

Individuals domiciled or resident in Chile are taxed on their worldwide income. However, foreign individuals who settle in Chile are subject to income tax only on their Chilean-source income for the first three years from their date of entry.

Individuals with Chilean-source income

Individuals who are not domiciled or resident in Chile are subject to taxes in Chile on their “Chilean-source income”. For tax purposes, Chilean-source income is income from assets located in Chile or activities carried on the country, regardless of the domicile or residence of the taxpayer.

A payment from within Chile to a non-domiciled or non-resident individual for services provided abroad (therefore not strictly Chilean-source income) is generally subject to withholding tax of 35%. However, payments received for technical services provided in Chile or abroad are subject to withholding tax at 15% or 20% if the recipient is domiciled in a “tax haven”.

Different rates and double taxation avoidance agreements may apply to some situations.

11. Are there any restrictions on foreign ownership and investment in specific industry sectors? Do any formalities, permit or notification requirements apply?

The constitution establishes a general principle of non-discrimination. More specifically:

  • The burden of tax must be distributed equally (Article 19, no 20, Constitution).
  • There must be no arbitrary discrimination by the state in economic matters (Article 19, no 22, Constitution).
  • The law does not recognise any difference between locals and foreigners in the acquisition and exercise of civil rights (Article 57, Civil Code).
  • In the exercise of their business activities, foreign investors operating under Chilean law are subject to the same laws and regulations as local investors in the same industry.

The general principle of non-discrimination and the right to equal treatment applies to both local and foreign investors. There are, however, a few exceptional situations:

  • Immovable goods and land in border areas. Immovable goods located in a “border area” may not be acquired by natural persons from a neighbouring country (See Question 13).
  • Fishing and aquaculture. Only natural persons of Chilean nationality, legal entities constituted under Chilean law and foreigners with permanent residence in Chile can be granted authorization to harvest and capture hydrobiological species.
  • Hydrocarbons, lithium and deposits in Chilean waters. Mining concessions cannot be awarded on liquid or gaseous hydrocarbons, lithium or deposits of any type in Chilean waters, or areas classified as important for national security.
  • Naturally-occurring nuclear materials and nuclear energy. Naturally-occurring nuclear materials cannot be subject to any legal act except those implemented or entered into by, with or with the authorisation of the Chilean Nuclear Energy Commission.
  • Domestic shipping. Only Chilean boats are permitted to transport passengers and freight along the coast, by river or on lakes between different points in Chile or between them and naval infrastructure in Chilean waters or the Economic Exclusion Zone.
  • Only legal entities governed by public or private law and constituted and domiciled in Chile may hold a concession for an open television service or make use of it.
  • Telecommunications and radio. Only legal entities constituted and domiciled in Chile may hold a telecommunications or radio broadcasting concession.

12. Does the government retain and exercise control over certain industry sectors? If so how?

Chilean has a private enterprise system. The general principle is that the market is the prime regulator and not the government. The state may only intervene as a service provider when private entities are not capable or do not wish to enter specific economic sectors (Article 1, Constitution). The state is obliged to ensure the population receives basic services, whether provided by the state by or private enterprise.

However, the government does supervise and monitor the activity of private and public entities in certain areas of the economy due to their importance for the stability and growth of the economy, or where there is particular public interest.

The government monitors the following economic sectors through superintendencies:

  • Fishing
  • Banking
  • Insurance and public investment funds.
  • Pension and private health insurance.
  • Casino and gambling businesses.

The government also regulates and supervises public service industries and industries where there is insufficient competition for the market to regulate, including the electricity market, the water and gas services industries and the telecommunications industry.

Due to its importance, the exploitation of natural gas and hydrocarbon deposits is undertaken directly by the government, through a government agency or under special agreement defined by presidential decree.

The mining sector is the largest contributor to the economy, and special non-litigious court proceedings are required for the grant of mining concessions, although it is possible to acquire a concession already granted to someone else. Additionally, projects in the copper mining sector require the approval of the Chilean Copper Commission.

13. Are there restrictions on foreign ownership or occupation of real estate? Do any formalities, permit or notification requirements apply?

In general, there are no restrictions on foreign ownership or occupation of real estate. Foreign investors can own and occupy real estate on the same basis as Chilean nationals. There are a few exceptions:

  • Nationals of Argentina, Bolivia and Peru cannot acquire land close to international borders. This rule also applies to entities whose main offices are located in those countries, or those where 40% or more of their capital belongs to nationals of a bordering country or which are effectively controlled by nationals of those countries.
  • Land that belongs to the state can only be acquired, leased or transferred to Chilean individuals or entities if it is:
  • located within ten kilometres of the national border; or
  • located within five kilometres of the coast.

Land at the shore within 80 metres measured from the line of the highest tides cannot be transferred.

14. Are there any minimum capital requirements for foreign investment?

There is no minimum capital requirement for foreign investors.

15. Are there any exchange control or currency regulations? Are there any restrictions on the remittance of profits abroad?

Generally, any person or entity, local or foreign, may freely enter into foreign exchange transactions. However, certain foreign exchange transactions may need to be reported to the Central Bank or carried out in the MCF (see Question 5).


16. Are there any restrictions on the importation of commercial goods and services?

As a general rule, any goods can be imported into Chile except those that are specifically prohibited by law such as second-hand vehicles and motorbikes, asbestos in any of its forms, pornography, and toxic industrial waste.

Due to their nature, some imports are subject to inspection, authorisation or control by a government service. This is the case, for example, with the import of explosives, vegetable products, pharmaceuticals and radio communications equipment.

17. What import duties apply to commercial goods and services?

Ad valorem custom duty at 6% applies to all imports, calculated based on the CIF price. VAT (19%), calculated using the CIF value plus the ad valorem duty, is then also charged.

In the case of second-hand goods whose import is authorised, a 3% tax is levied on their CIF value in addition to all the other taxes to which they are liable.

The situation described above can, however, vary when the goods are from a country with which Chile has signed a trade agreement. Under most of these agreements, import duties on certain products are eliminated or gradually reduced. As a result, the average duty actually charged on imports into Chile in 2016 was only around 0.89%.

Under Law 20,690, introduced in 2013, Chile has, in addition, unilaterally and gradually eliminated duty on all goods from less developed countries, except in cases such as wheat, wheat flour and sugar.

18. Are the safety regulations and standards applicable to commercial goods in your jurisdiction compatible with other standards that are recognized internationally?

Standards and safety regulations in Chile are similar to those in other countries where the International Organisation for Standardisation (ISO) standards apply. Regulation is of the highest standard in the most common areas of international investment, such as energy, chemistry, construction, mining, metals and electricity.

The National Institute of Standardisation (Instituto Nacional de Normalización) (INN) is the Chilean institution equivalent to the ISO, of which Chile is a member since its foundation in 1947. The INN is recognised by the Bureau International des Poids et Mesures (BIPM, or International Bureau of Weights and Measures) as the National Metrologic Institute. The INN sets its own standards known as the Chilean Regulation (Norma Chilena) through which it can certify that international ISO standards are met.

19. Are there any similar or equivalent restrictions on providing services into another jurisdiction?

See Question 18.

20. How is foreign investment into your jurisdiction typically structured? What forms of legal vehicle are attractive to foreign investors?

Companies are the most common investment vehicles. Most companies are:

  • Publicly or non-publicly held stock corporations (sociedades anónimas).
  • Companies represented by shares (sociedades por acciones).
  • Limited liability companies (sociedades de responsabilidad limitada).

Although there are different implications for investing in each type of company, from a purely tax perspective only investing in stock corporations makes an important difference, as these types of organisation cannot opt out of the attributed income system (see below, Attributed income system). All other types of organisation may choose between systems if their shareholders’ composition allows.

Chile has an integrated system for the taxation of business profits, meaning that the corporate income tax paid by the companies can be used as a credit against the income taxes to be paid by their shareholders for those profits. This system has seen several modifications in recent years, probably the most relevant being the one that entered into force in 2017, which establishes the following two regimes:

  • Attributed income system. Under this system, the corporate tax rate is lower (25%), but a non-resident shareholder is required to pay 35% withholding tax on an attributed basis for the company’s profits, regardless of whether the company makes a dividend payment. A positive aspect of this regime is that all the corporate tax paid by the company is credited against the withholding tax. Any subsequent income distribution is free of tax because this income was already levied when it was attributed.
  • Partially integrated system. In this system, the corporate tax rate is higher (27%), but shareholders are not levied until the income is actually distributed by the company. The negative element of this regime is that, as a general rule, dividends distributed to non-Chilean resident shareholders will be subject to 35% withholding tax, against which only 65% of the corporate tax paid by the company can be used as a credit. However, shareholders who are residents of countries with which Chile has a tax treaty in force can use 100% of the corporate tax paid by the company against their withholding tax. This benefit has also been granted until 2021 to residents of countries with which Chile has tax treaties signed but not in force (for example, the US).

Investment of loan capital

Investment can be by means of loans. Payments of interest by companies to foreign lenders are subject to withholding tax (currently 35%). However, the rate of withholding tax is 4% if the lender is a foreign or international bank, financial institution or insurance company, or a foreign pension fund. Where withholding tax is payable at 4%, the total debt the Chilean company may incur is limited by the thin capitalisation rules (see Question 23).


Branches of foreign companies are subject to income tax on the income generated in Chile and on the income generated abroad that is attributable to the Chilean branch. The tax treatment of a branch is very similar to tax treatment of companies. Branch structures do not therefore offer any particular tax advantage in Chile.

From a limitation of liability perspective, companies owning a branch are directly liable for the branch’s obligations with third parties. If the business were carried on through a company, the shareholders would only be liable to the value of their contribution to the company.

21. What are the circumstances under which a business becomes liable to pay tax in your jurisdiction?

Businesses are liable for tax if:

  • They are domiciled or resident in Chile. For this purpose, a business is deemed to be domiciled or resident in Chile if it is organised under the laws of Chile. Businesses domiciled or resident in Chile are taxed in Chile on their worldwide income.
  • They have Chilean-source income, regardless of their domicile or residence.

Chilean-source income is the income from assets located in Chile or activities carried on in Chile. As a general rule, withholding tax of 35% applies to payments received by non-domiciled or non-resident businesses for services provided abroad. However, payments received for technical services provided in Chile or abroad are subject to a lower rate of 15%, unless the recipient of the payment is domiciled in a tax haven. If the recipient of payments for technical services is related to the payer, the withholding tax rate increases to 20%.

22. What are the main business tax rates?

The following are the main business tax rates:

  • Corporate tax (first category tax). Under the attributed income system, companies are subject to a corporate tax rate of 25%. Under the partially integrated system, companies are subject to a corporate tax rate of 27%. (See Question 19.)
  • Withholding tax (Impuesto Adicional). Individuals or businesses not resident or domiciled in Chile are subject to a withholding tax rate of 35%.
  • Final tax (Impuesto Global Complementario). Individuals domiciled or resident in Chile are subject to progressive rates of tax ranging between 0% and 35%.
  • Value added tax (VAT). The VAT rate is 19%.

Stamp tax. The current monthly rate is 0.066%, with a maximum rate of 0.8%.

23. What is the tax treatment in your jurisdiction of profits from an investee company remitted outside your jurisdiction by an investor?

The dividends or profits that companies allocate, distribute or agree to distribute to their shareholders or partners abroad are subject to a 35% withholding tax.

Companies may choose to opt for an attributed income system (see Question 19). Under this system, there will be no tax to pay on payments remitted abroad, because the withholding tax is payable on an attribution basis in the year that the income is generated by the company, not when the income is actually distributed. All the corporate tax paid by the company is set against the withholding tax.

If the company opts instead for the partially integrated system, the withholding tax is triggered only when distributions are made. The amount of credit for corporate tax that can be used against the withholding tax depends on where the foreign investors are resident. There is a credit of 100% of the corporate tax if the investor resides in a country that has a double-tax agreement with Chile in force, or, until 2021, signed but not in force. If there is no double tax agreement, only 65% of the corporate tax already paid is credited against the withholding tax.

Chile has 32 double tax agreements in force and two signed but not in force, all based on the OECD model.

24. What transfer pricing and/or thin capitalisation restrictions may apply to investments into your jurisdiction from elsewhere?

Transfer pricing rules

Transfer pricing rules provide that cross-border transactions between related parties must be carried out at arm’s length. This means that the price, value or profits obtained in these transactions must be at the level an independent party to the transaction would have obtained.

The tax authority may adjust the price of the transaction if the taxpayer cannot satisfactorily prove to the tax authorities that related-party transactions were carried out at arm’s length value. The increase in price resulting from of the adjustment is subject to 40% tax, and the taxpayer is also subject to penalties from 1 UTM (monthly tax unit) to 30% of the difference determined by the tax authority.

Thin capitalization rules

Payment of interest to non-resident entities is generally subject to withholding tax of 35%. However, interest paid to certain entities including depositors, foreign or international banking or financial companies and insurance companies, is subject to withholding tax at 4%; the 35% rate can also be reduced through application of double taxation treaties.

Under thin capitalization rules, the same interest that qualifies for 4% or reduced withholding tax is subject to a special penalty tax if it is paid to a related entity and the Chilean taxpayer’s debt is considered excessive. A company is considered excessively indebted if its debt exceeds three times its net worth.

The penalty tax rate is 35% and applies to payments made to related foreign entities subject to either the 4% or reduced withholding tax rate, or not subject to withholding tax. The tax penalty must be paid by the local taxpayer. For thin capitalization rule purposes, tax law applies a broad definition of “related entities”.

25. What tax incentive or other schemes exist to encourage foreign investment?

Several legislative provisions grant foreign investors a preferential tax treatment, including the following.

Double taxation agreements

There are double taxation treaties with a number of other jurisdictions (see question 22).

Investment funds

Foreign investors investing through investment funds (including mutual funds and private funds) are subject to more favourable tax treatment than local investors using the same vehicle. For example, a fixed 10% income tax rate and possible exemption from tax are available in some circumstances (that is, at least 80% of the assets are dedicated to international investment for a minimum period of time, and other requirements regarding internal policies and regulations).

Foreign or international banking and financial institutions

To encourage foreign investors and institutions to make credit available to resident investors, interest payments paid abroad to foreign or international banking or financial institutions, insurance companies and foreign pension funds, among others, in exchange for loans granted to Chilean-resident investors are subject to a 4% withholding tax only, instead of 35%.


This agency’s purpose is the promotion of foreign investment in Chile through seeking opportunities of investment and making offers. The agency can certify the status of “foreign investor”, which allows investors to access temporary contracts characterized by tax invariability.


26. What legal guarantees exist against expropriation and/or provide for appropriate compensation? What is your government’s track record in this regard?

The principal regulation regarding expropriation is Article 19, No. 24 of the Constitution. This provides that no person may be deprived of property rights or the essential means to exercise those rights. However, a general or special law may authorise expropriation in the case of public utility or interest. The first legal guarantee of a person’s property right is therefore that a general or special law is required to authorise a particular government body to order expropriation.

Several authorities are empowered to order expropriations in specific circumstances. However, the procedure through which the expropriation is made is always the same. Therefore, a second legal guarantee is established through the existence of a known and public procedure to approve an expropriation. The process is set out in the Decree Law No. 2,186 of 1978, which complements the stipulations and requirements of Article 19, No. 24 of the Constitution.

The government must pay compensation for pecuniary damages caused by any expropriation that takes place. Compensation is paid on the basis of the market value of the property. The obligation on the government to pay compensation is established in the Constitution, but legal powers and institutions determine liability in a particular instance and the amount payable in compensation. There is a judicial procedure to challenge the amount of the compensation. The government may pay compensation in cash or by instalments. The amount of each instalment is subject to adjustments and interests. A special rate of interest accrues in the event of a default or arrears in payments.

27. Are there any issues in relation to the enforcement of intellectual property rights?

Although the intellectual property regime is developing quickly, it is still not completely effective in some important areas, and the advances are not as fast as in other countries. For example:

  • There is no efficient means of penalising piracy and other intellectual property infractions.
  • Some rights, such as software and certification trade marks, protected in most of the developed countries, have not been recognised yet in our legislation, and therefore are only indirectly protected.
  • The approach to registering and protecting different types of right is fragmented and its surveillance sometimes ineffective.

Chile has been a member of WIPO since 1975 and has joined in or ratified several treaties related to intellectual property, namely the:

  • WIPO Performances and Phonograms Treaty (WPPT) 1996 (April 2001).
  • WTO Agreement on Trade-Related Aspects of Intellectual Property Rights 1994 (TRIPS) (December 2004). The legislation that ensures compliance with TRIPS includes provision for expedited court proceedings and the authority to seize illegal copies of patented products.
  • Patent Cooperation Treaty 1970 (PCT) (2008).
  • Convention on Cybercrime 2001 (Budapest Convention) (2017).

The main agencies responsible for intellectual property matters are the Department of Libraries, Archives and Museums (Dirección de Bibliotecas Archivos y Museos) (DIBAM) and the National Institute of Industrial Property (Instituto Nacional de Propiedad Industrial) (INAPI).

Authors’ copyright and related rights, both moral and pecuniary, are protected by DIBAM. Regulations regarding IP rights recognise the existence of intellectual property from the point it is created and the registration process gives authors the means of proving the novelty of their work.

Industrial property rights such as trade marks, denominations, geographical indications, patents and designs are protected by INAPI. There are strict requirements to fulfil before industrial rights are granted, but once granted, the protection conferred is valid and enforceable in accordance with international standards.

The US and Chile have committed to making a system available to resolve disputes regarding internet domain names. This follows international standards regarding issues such as the cyber piracy of brands and trade marks for country domain names. Both countries have also committed to create a database of information on individuals who have registered higher-level domain names. This database will protect the personal data of those who have registered names.

28. Are there any issues in relation to the gaining and enforcement of judgments and/or arbitral awards?

Foreign investors can gain and enforce judgments or arbitral awards in the same way as local investors under the principle of non-discrimination.

The court system is transparent and independent of government and congress. Transparency International’s 2017 Corruption Perceptions Index awarded Chile a score of 67 on a scale from 0 (highly corrupt) to 100 (highly clean). This placed Chile 26th out of the 180 countries in the index.

However, because of the large volume of cases and because the civil resolution system has not been updated for some time, it can take up to six years to obtain a ruling in the ordinary court system. Consequently, parties to commercial disputes often choose to settle their disputes through arbitration.


29. Have there been any significant recent or proposed legal developments affecting investors?

President Piñera has publicly stated that he aims to introduce policy changes to several areas including pensions, the tax system (to reintegrate the tax regime, among other reforms), the environmental impact assessment system and infrastructure. However, it is likely that the composition of the new Chilean Congress will limit Mr Piñera’s ability to implement his main reform objectives, as no coalition will have an absolute majority.

Are there any planned or on-going treaty negotiations or political developments that could have an impact on your jurisdiction’s bilateral relationships with other nations and/or other economic, customs or monetary unions, free-trade areas or markets?

30. Are there any planned or on-going treaty negotiations or political developments that could have an impact on your jurisdiction’s bilateral relationships with other nations and/or other economic, customs or monetary unions, free-trade areas or markets?

Chile has recently signed a free trade agreement with Indonesia. It is also part of the proposed Trans-Pacific Partnership (Acuerdo Estratégico Trans-Pacífico de Asociación Económica).

Main investment organisations

World Trade Organization (WTO) (Organización Mundial del Comercio) (OMC)

Main activities. Organisation for the supervision and liberalisation of international trade.


Organisation for Economic Co-operation and Development (OECD) (Organización para la Cooperación y el Desarrollo Económicos) (OCDE).

Main activities. International economic organisation that stimulates economic progress and world trade.


Southern Common Market (Mercado Común del Sur) (MERCOSUR).

Main activities. A sub-regional bloc comprising Argentina, Brazil, Paraguay, Uruguay and Venezuela, with associate countries (Chile, Bolivia, Colombia, Ecuador and Peru).


Pacific Alliance (Alianza del Pacífico).

Main activities. A regional integration initiative to promote further growth, development and competitiveness of the economies of its members (Chile, Colombia, México and Peru).


Central American Integration System (Sistema de la Integración Centroamericana or SICA).

Main activities. Economic and political organisation of central American states.


Online resources

This is Chile


Description. The government’s official website to promote Chile as both a tourist and economic destination.

Foreign Investment Committee


Description. The Foreign Investment Committee’s official website. It includes a brief explanation of the main investment areas and a useful investor’s guide.

Start up Chile


Description. Unofficial government website to promote entrepreneurship.

Central Bank of Chile


Description. Central Bank of Chile’s official website, in which the government’s regulations and economic information can be found.

Pro Chile


Description. An official government website with information for international investors.

Chile government official website


Description. Chile’s official government website.