Chile’s tax system is comprehensive, encompassing a variety of taxes ranging from corporate and personal income taxes to gift and inheritance taxes, while not imposing a wealth tax. Furthermore, this overview provides a detailed look into the country’s tax rates, including progressive scales for personal income, gift, and inheritance taxes, and a bifurcated corporate income tax rate. Additionally, Chile’s commitment to preventing tax avoidance through various regulations, its participation in double tax treaties, protection of foreign investments, and adherence to international tax cooperation standards underscores its sophisticated tax regime.
Chile’s Tax System overview
| Corporate Income Tax: | 27% |
| Personal Income Tax: | 40%, progr. |
| Inheritance Tax: | 25%, progr. |
| Gift Tax: | 25%, progr. |
| Wealth Tax: | None |
Corporate Income Tax
Personal Income Taxation
Chilean residents are subject to tax on worldwide income at progressive rates up to 40%. Chile imposes gift and ineritance tax at progressive rates up to 25%, dependng on amounts and relationship to donor/decedent. Chile does not impose wealth tax.
Anti-Avoidance Rules
Chile has General Anti-Avoidance Rules (GAARs). Chile also has Transfer Pricing rules, Thin Capitalization rules, and Controlled Foreign Corporation (CFC) rules, see below.
Controlled Foreign Corporation Rules
Chilean residents that own 50% or more of CFCs with passive income are subject to taxation on undistributed profits. Control is defined as ownership or control of more than 50% of the capital, profits or voting power of the foreign entity; or power to elect a majority of directors; or unilateral power to amend the statutes or change a majority of the board, etc. A foreign corporation will be presumed to be a CFC if it is resident in a low tax jurisdiction (LTJ) Chilean residents have a purchase option over 50% of the capital, profits or voting power of the foreign company; Chilean residents can change a majority of the board or amend the statutes.
Double Tax Treaties (DTTs)
Foreign Investment Protection
OECD Multilateral Convention
Common Reporting Standard (CRS)
FATCA
In summary, Chile’s tax system is characterized by its structured approach to both domestic and international taxation, aimed at ensuring fairness and compliance while promoting economic growth. Through progressive tax rates, strategic anti-avoidance rules, and active participation in global tax agreements, Chile maintains a balanced and competitive tax environment. This not only facilitates the protection and encouragement of foreign investment but also aligns with global efforts to enhance tax transparency and combat evasion.
