With a population of only 17 million Chile is one of the smallest LATAM countries. At the same time, it stands out in comparisons to its neighbors because of its particularly stable political, economic and social climate. Chile`s promising economic development is mostly based on its many international free trade agreements which practically enable a custom-free access to all markets worldwide. Furthermore, Chile is the first LATAM country which has an Association Agreement with the EU wherefore German companies can export their goods costum-free. The economic pillars of Chile are mining (due to the large copper deposits) as well as the agricultural sector. For both sectors modern technologies are needed which make Chile an attractive target country for companies dealing in sensorics, electronics, automatization, and energy efficiency.
Chile employs the e-Invoicing system since 2014 which obligates companies to generate and submit ten different document types: the Documentos Tributarios Electrónicos (DTE). These documents are being generated as a XML file that is being signed electronically before being send to the tax authority SII (Servicio de Impuestos Internos).
Generating the Folio Range Authorization Codes (CAF)
A company must apply for a Folio range of authorization codes (CAF) on the SII-website. The CAF are a series of successive numbers that are needed for each individual document type. The SII issues the CAF once a year. They are needed to generate the electronic stamp which in turn validates the DTE.
Double signature: electronic stamp & e-signature:
The authorization codes carry a personal key, which encrypts the electronic stamp. The stamp itself consist of specific tax data that are being extracted from the invoice. Additionally, the invoice has to be validated using the sender`s digital certificate (e-signature).
Submittance to the SII:
A company has to submit the DTE to the SII and wait for its online approval bevor sending the invoice to the client. Nevertheless, in 2009 an anti-corruption law was created which is inspired by the OECD`s Anti-corruption Convent.
Out of all the LATAM countries Chile is the least corrupt ranking 26 out of 180 countries in Transparency International`s Corruption Perception Index of 2017 (the next-best LATAM country is Argentina ranking 85). Nevertheless, in 2009 an Anti-corruption law was created which was inspired by the OECD`s respective Convention and demonstrates Chile`s aspiration to join the Organization. In terms of legal theory, the law is based on the assumption that companies do not purposefully act against the law but rather implement no or lacking prevention mechanisms.
Therefore, effective compliance programs (modelos de prevención) are not only welcomed but also supported and tested by state-certified programs. The criteria for the testing are:
Appointment of a Supervisor (Compliance Officer)
- (renewable) term of up to three years
- Independent from management, proprietors, partners, shareholders
- Equipped with all material and non-material resources to fulfill his mission
- Direct contact to the management for information exchange and reporting
Establishment of a prevention system (Compliance Program)
- Identification of risky activities and processes within the company
- Creation of protocols, rules and processes to prevent corruption
- Adaptation of the auditing process
- Internal disciplinary measures
- Compliance and interaction with labor law
Monitoring and Certification of the prevention system
- Prevention system can be be certified by the state
There are leniency programs in place which – in case of an effective compliance program implementation, the cooperation with the public institutions and the payment of damages can lead to the closing of procedures or investigations or reduced sanctions.
|Legal basis||Law 20391 (2009)|
|Compliance program duty?||No, but official certification is possible|
|Standards||· Appointment of prevention supervisor (Compliance officer)
· Implementation of preventive Compliance program
|Compliance program as mitigating factor?||Yes, even when the implementation is carried out after a case of corruption|
· Disqualification in terms of periodic or permanent suspension of contracts with public institutions
· Cancellation of licenses, concessions, rights or administrative authorizations
· Dissolution of the company
· Loss of state-granted benefits
Tax Law and Taxes
In 2014, a tax reform has been introduced in Chile which replaced the fully integrated tax system in 2017 with two co-existing systems: the Integrated System (sistema integrado) and the Semi-Integrated System (sistema semi-integrado).
The Integrated System (régimen integrado con atribución de renta)
Within the Integrated System there is no differentiation if profits are being distributed or not. The CIT of a company is being taxed at 25%. Moreover, shareholders are being taxed with a progressive tax rate for Chilean residents and a fixed tax rate of 35% for foreign investors. The company`s crediting of the paid CIT takes place on the level of the shareholders. This results in a total tax load of 35%. This tax model is open to individual companies, E.I.R.L., private companies, and S.p.A.s if a natural person is a shareholder.
The Semi-Integrated System (régimen parcialmente integrado de tributación)
Within the Semi-Integrated system there is differentiation of profits are being distributed. This entails a higher tax rate of 27% Only if the profits are actually being distributed shareholders are being taxed at maximum of 35%. A crediting for shareholders is possible for up to 65%, which can lead to a maximum tax load of.
The following rules apply to both tax systems:
- A voluntary payment of the CIT is possible if no usable tax credits are available
- Within the Integrated System these payments are deductible from the CIT
- Within the Semi-Integrated System these payments are handled as tax credits
- The change from one into the other system is only possible after 5 years if the entire CIT has been paid
- An automatic change from the Integrated to the Semi-Integrated System takes place as soon as one of the company`s proprietors is no final tax payer anymore
- Tax payers have to create a protocol of their accumulated tax credits which will be cleared with the CIT
|Tax type||Tax base||Rate|
|CIT (Impuesto de Primera Categoría)||Total income including capital gains||since 2018: 25% or 27%, depending on the used tax system*|
|Income tax (Impuesto de Segunda Categoría)||Total income – world income principle||Progressive rate of 0% up to 40%|
|Complementary Tax (Impuesto Global Complementario)||All complementary income of natural persons residing in Chile||0% up to 45%|
|VAT (Impuesto a las Ventas y Servicios)
|Goods and services||19%|
|Property Tax, Commercial Tax, Stamp Tax, Inheritance and Gift Tax||Real estate, certifications, inheritance, gifting||Depending on value and location|
* explained above
A double taxation agreement with Germany does not exist as of now. Neither does an agreement regarding the repatriation of the VAT.
An explanation of all relevant technical and tax terms is available here.