The Chilean tax authority (Servicio de Impuestos Internos - SII) has issued Circular No. 22 of 19 April 2018 concerning the activation of the MFN clauses with respect to interest and royalty income under six of its tax treaties as a result of the entry into force of the 2016 tax treaty with Japan.
For the 2002 tax treaty with Denmark, the 2000 tax treaty with Poland, and the 2002 tax treaty with South Korea, the Circular provides that the following withholding tax rates apply as from 1 January 2017 with respect to interest income:
With respect to interest income eligible for the 4% rate indicated above, if the interest is paid as part of an arrangement involving back-to-back loans or similar arrangements, the rate will instead be 5% if paid to a bank or insurance company or as part of a sale on credit, otherwise the rate is 10%.
With respect to royalty income, the following withholding tax rates apply as from 1 January 2017 for the three treaties:
The Circular also covers the withholding tax changes in respect of interest and royalty income resulting from the MFN clauses in Chile's tax treaties with Ireland (previous coverage) and the UK (previous coverage), and the withholding tax changes in respect of interest income resulting from the MFN clause in the tax treaty with the Czech Republic (previous coverage).
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