Tax rates in Chile

Company Tax

27%

Tax Rate For Foreign Companies

Resident companies are taxed on their worldwide income, whereas non-domiciled or non-resident companies are taxed only on their Chilean-sourced income.
Final shareholders are subject to a 35% flat rate applied by way of withholding upon receipt of a taxable distribution. The tax on corporate income was totally creditable against final tax in the SME regime, but only 65% is creditable in the partially integrated system. Nevertheless, foreign owners of a partially integrated system entity that are resident in a double taxation treaty jurisdiction are entitled to full credit as well.

Capital Gains Taxation

Capital gains are subject to standard corporate tax but may be exempt based on certain criteria: the length of time the shares are held, the usual or occasional nature of the purchase or resale of shares and the relationship between the seller and the buyer. Gains derived from certain securities are subject to a preferential tax treatment (i.e. investment funds’ quotas listed on an authorised stock exchange market, stock of listed local companies, mutual funds’ quotas if the fund invests in stock trade values, etc.).

Main Allowable Deductions and Tax Credits

In general, expenses incurred to generate taxable income can be deducted.
Deductible expenses include net operating losses, payments to foreign affiliates, and taxes (not including income taxes). Subject to conditions, interest expenses can be deducted. Under certain circumstances, bad debts and charitable donations (up to 5% of the company's net taxable income) can be deductible. The deductibility of payments made abroad for the use of trademarks, patents, formulas, and consulting and other similar services is limited to a maximum of 4% of the income derived from sales and services in the corresponding year. Start-up expenses can be amortised over a six-year period. Fines, penalties and the respective legal costs incurred are deductible, subject to conditions.
Losses can be carried forward indefinitely, while carrybacks are not allowed.

Other Corporate Taxes

Other taxes include a stamp tax (maximum 0.8%), municipal license fee, real property tax (1.4% in case of non-farming real estate and 1% for farming real estate, exemptions apply), payroll taxes (ranging from 0% to 40% of employees' remuneration), social security contributions, as follows:

- a monthly 0.93% premium on remuneration for labour-related accident insurance
- 2.4% of the worker’s gross salary for compulsory unemployment insurance contribution
- a 1.99% premium for life and disability insurance
- additional contributions depending on the risk of the employment activity, at rates of up to 3.4%.

Other Domestic Resources

Internal Taxes Service (SII)

Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.

Tax Rate

Allowable Deductions and Tax Credits

In general, all expenses incurred in the employer’s sole interest are duly deductible (for example travel and lodging expenses and documented entertainment).
Individuals resident in the country may deduct the interest paid for mortgage loans destined to the purchase or construction of one or more dwellings (capped at 8 annual tax units). A deduction for voluntary pension contributions is also applicable for resident employees, within a limit of 600 annual tax units. Furthermore, parents are granted a tax credit against their personal taxes for expenses related to the primary and high school studies of their children.

Special Expatriate Tax Regime

Foreigners working in Chile are subject to taxation only on their Chilean-source income during the first three years in Chile, after which worldwide income is taxed.
Resident foreigners are taxed on their salary, deducting social security contributions. Non-resident foreigners cannot deduct social security contributions before acquiring Chilean residence. Foreign individuals may be exempt from some local social security payments, provided they belong to a foreign social security entity system covering at least pension, disability, illness, and death.
A non-resident flat tax can also apply for technical or engineering work or professional services that an individual renders through a report, advice, or plan development, at a rate of 15%.