Accounting and tax in 2021
- Corporate income tax rate is levied at 20% on world-wide income. Capital gains are also taxed at the same rate (20%);
- Non-residents living in Chile are subject to tax on income sourced from Chile during the first three years. After this period, they are subject to tax on their worldwide income;
- The standard rate of VAT is 19%. All resident companies must file for VAT on a monthly basis;
- Resident companies can carry forward or backward tax losses indefinitely;
- Dividends from a Chile resident company to a non-resident company are subject to withholding tax of 35%. Dividends transfer between resident companies is tax-exempt;
- Interest payments are subject to a withholding tax of 35%, while royalties are subject to withholding tax of 30%;
- Rural property is taxed at 1% annually, while the urban property is taxed at 1.2%;
- Tax returns must be filed by the 31st of April, every year;
- Only certain entities are required to file audited statements. These include banks, financial institutions, insurance companies, pension plans and public-traded companies;
- Consolidated statements must be prepared when a subsidiary is controlled at 50 percent or more by a corporate shareholder. However, when the subsidiary’s operations differ significantly from those of the parent company, consolidation is not required;
- Chile imposes no exchange controls over money transfers by resident businesses;
- Chile has a network of 28 Double Taxation Treaties with countries including Australia, South Africa, UK and USA. These treaties reduce withholding tax on payments abroad;
- Healy Consultants assists our Clients with i) documenting and implementing accounting procedures ii) implementing financial accounting software iii) preparation of financial accounting records and iv) preparing forecasts, budgets and sensitivity analysis;
- For an active trading company, these accounting and tax fees are an estimate of Healy Consultants fees to efficiently and effectively discharge your annual company accounting and tax obligations. Following receipt of a set of draft accounting numbers from your company, Healy Consultants will more accurately advise accounting and tax fees. For a dormant company, Healy Consultants fees are only €950;
- It is important our Clients’ are aware of their personal and corporate tax obligations in their country of residence and domicile; and they will fulfill those obligations annually. Let us know if you need Healy Consultants’ help to clarify your annual reporting obligations.
Legal and compliance in 2021
During the Chile company registration process, Healy Consultants Compliance Department guides our Client through legal and tax obligations.
- According to Companies Act, a Chile company must have at least one permanent resident representative of any nationality;
- Every company must lodge an annual return confirming relevant details of the company for the public register including names and addresses of all directors, address of principal place of business and details of shareholders and their shareholdings;
- Each company must have a registered office in Chile. Healy Consultants can provide this for annual fee of US $1,100;
- Chilean companies must obtain a Tax Identification Number (RUT) and register for VAT prior to starting business;
- There are four major taxes in Chile i) Corporate and personal income taxes ii) Value-Added Tax iii) Customs duties and iv) Stamp tax. Collecting information, completing tax return forms and preparing separate tax accounting books in some cases might be a challenging task. Healy Consultants will be pleased to help you with the same;
- A company secretary is not required when forming a company in Chile; however Healy Consultants recommend one be appointed to ensure a correct compliance in accordance with corporation act;
- When starting a business in Chile, it is important to anticipate what registrations and licenses are required. This is a complex area as the type of permits or special licenses vary depending on the nature of the activity and include health, environmental and municipal permits;
- After forming a company, entrepreneurs should prepare a business start-up document and submit it to the National Tax Service (SII). When needed, Healy Consultants will complete these tasks on your behalf;
- Every Chilean company must obtain a working license from the municipality where they operate (for each of the enterprise’s establishments, offices, warehouses). The license fee is paid once a year for a 12-month period, from July 1st to June 30th. The fee ranges from 0.25% to 0.5% of the company’s share capital;
- To comply with Chilean Law, all employees in the country must register to a professional accident insurance controlled by public authorities;
- It is compulsory for every Chile company to appoint a local Legal Representative. To minimize complexity, Healy Consultants recommends our Client appoint a Chile staff member already in the country. If our Client is uncomfortable with this strategy, Healy Consultants will provide a passive, nominee Legal Representative. Our annual fee for the same is US$12,000.
- In November 2020, Chile increased its legal monthly minimum wage to US$430 per month (from US$388). This is the highest legal minimum wage in Latin America.