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 the 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. In specific situations outlined by domestic legislation, preferential tax treatment applies to capital gains from certain securities, including stock of listed local companies, investment funds' quotas listed on authorized stock exchange markets, mutual funds' quotas invested in stock trade values, and investment funds' quotas predominantly invested in stock exchange markets, with at least 90% of the portfolio dedicated to such investments.
Capital gains obtained upon the alienation of real estate may be considered as non-taxable income in certain cases.

Main Allowable Deductions and Tax Credits

Expenses linked to business interest, development, or maintenance, capable of generating income in the current or future commercial years, are typically tax deductible.
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, 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 stamp tax (maximum 0.8%), municipal license fee (ranging from 0.25% to 0.5% on tax equity, up to a maximum of approximately USD 550,000), 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), and 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 1.61% premium for life and disability insurance
For job positions categorized as "heavy work," the employer is required to contribute an extra percentage to the employee's pension fund, ranging from 1% to 2%, with a cap set at a variable amount.

To determine these contributions, employees' taxable remuneration is assessed, capped at 81.6 UF (approximately USD 3,300), except for unemployment insurance, where the maximum taxable remuneration cap is 122.6 UF (approximately USD 4,950).

Other Domestic Resources

Internal Taxes Service (SII)

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, Chilean residents may receive a credit of up to UF 4.4 (approximately USD 177) per child for educational expenses. This credit is gradually reduced to zero for taxpayers with combined annual incomes exceeding UF 792 (approximately USD 31,896) from both parents.

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.Prior to establishing residence, a flat 15% tax is typically imposed on activities categorized as technical or engineering work, or professional services, which individuals provide through reports, advice, or plan development. Different rates may apply for other activities or if the paying company is based in a tax haven.