With complex legislation surrounding tax matters for companies in Chile, it is imperative to understand the laws so your business remains compliant. It is the second year in which the major tax reform changes are being applied to the tax collection process, adding new challenges for businesses.
If your business is registered in Chile, you must pay Chilean income tax on the worldwide income to the Chilean IRS (Servicio de Impuestos Internos - SII). If your company is registered elsewhere, but includes operations in Chile, you pay income tax on only your Chilean-sourced income. The corporate income tax rate is 25% or 27%, depending on the tax regime chosen by the company. The corporate tax paid by the company is creditable against the withholding tax applicable to the distribution of profits to the company's partners or shareholders.
Businesses are usually categorized into two tax regimes, although there are other designations. Depending on the regime, the tax rate will be different and so will the sworn statements that must be submitted to the Servicio de Impuestos Internos (Chile's IRS). This year there are 57 types of sworn statements. The tax regimes are:
Attributed Income Regime income received or accrued by a company is annually attributed to its shareholders or partners, regardless of the effective dividend distributions. Companies are subject to a 25% corporate income tax. this regime is available only to companies entirely held by Chilean individuals or non-residents (individuals or entities). Corporations (sociedades anónimas, or SAs) are excluded from this regime. Distributed Income Regime shareholders or partners are taxed only on the actual distribution of dividends or profits by the company. Companies are subject to a 27% corporate income tax. shareholders or partners are able to use 65% of the corporate income tax paid by the company as a credit against the withholding tax. The obligation to return 35%, will not be applicable to 'additional tax' taxpayers which are residents in countries with which Chile has signed an agreement to avoid double taxation, and to beneficiaries with remitted or distributed income as long as the 'first category tax' is deductible from the tax. In addition to the two main regimes, there are two other types of taxes that apply to companies that are not domiciled in Chile:
Complementary global this tax is paid by individuals domiciled and who are residents in Chile based on their...