03/01/2005
Santiago is one of Latin America’s best locales for conducting business. AméricaEconomia, a regional business magazine, ranked it number one in its “Best Cities for Doing Business in Latin America” list in 2004; it beat Miami for the top slot. The country in general earns high marks as an offshore location for multinationals. Consulting firm A.T. Kearney ranked it the ninth-best offshore business environment in the world. Chile also appears in the top quintile of two annual rankings of “economic freedom” (i.e., the right to conduct business free of government interference).
Chile has the most sophisticated and deregulated capital markets in Latin America. It boasts a state-of-the art digital infrastructure and well-functioning legal and banking systems.
Import duties: Most new goods that are imported into Chile are subject to the uniform 6 percent import duty based on their CIF (cost, insurance and freight) value. Used goods are subject to an import duty of 9 percent, and the importer pays the duty.
There are exceptions for certain agricultural products, luxury goods and software. Wheat, edible oils, sugar and wheat flour are subject to a price band to protect local producers. This results in additional charges that can effectively raise taxes on the import to as high as 29 percent (including the 6 percent duty).
The surcharges for luxury goods range from 30 to 70 percent, levied on articles of gold, platinum and ivory, furs, high-quality rugs, yachts & cigarettes. The 85 percent automobile luxury tax is applied to the CIF value of the vehicle in excess of $15,835.
VAT: There is an 18 percent value-added tax on all goods sold in Chile. Goods exported to Chile pay the VAT at the Customs House at the port of entry, after the import duties are paid. However, the government levies VAT on the total of the CIF value and the import duty.
Entry Fee: U.S. citizens must pay an entry fee of $100. Business Visa: It is not necessary to have a business visa unless you intend to stay for more than 90 days. Business people who visit Chile usually enter on a regular tourist visa, issued by immigration officers at the airport upon arrival. If you intend to stay in Chile for more than 90 days, but less than one year, you should obtain a business visa from the Chilean Consulate in the United States. For more information, go to www.aduana.cl. |
Permits: Import permits (called certificates of importation) are required. The government issues them on a pro forma basis to importers or agents, provided they are a resident of Chile. The procedure can take 2 to 3 days. The importer or his agent applies for a permit at the Central Bank for all shipments valued at more than $3,000. For lesser amounts, any commercial bank can issue the import permit.
Repatriating Income
Investors and businesspeople can repatriate money as soon as it is earned. Individuals can exchange currency at any bank, without restriction. Investors are able to remit dividends as soon as they are earned. Licensees may remit royalties to licensors as soon as they are earned. There is an official exchange rate set by the Central Bank of Chile; it is based on the market. There is also an informal (although legal) rate. The two rates seldom differ by more than a few points.
Income Taxes
Those establishing businesses in Chile can choose from two corporate income tax rates: 35 percent or 42 percent. The latter is a fixed rate granted to companies investing in Chile under the DL 600 Foreign Investment Statute. Under this law, the investor signs a contract with the Chilean government’s Foreign Investment Committee, guaranteeing an investor the 42 percent rate for up to 10 years. If the investor elects to be taxed at the 35 percent rate, he or she runs the risk that local legislators will raise that rate.
Sources: U.S. Department of Commerce;
Chilean Foreign Investment Committee
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