Tax Information Exchange Agreements (TIEAs) provide for the exchange of information on tax matters and Chile has concluded TIEAs with several countries, including Bermuda, Jersey, Uruguay, and Guernsey.
Chile has agreed to exchange tax rulings with eligible jurisdictions from 1 April 2016 in implementation of BEPS Action 5.
Automatic exchange applies to the following cross-border tax rulings and APAs:
- Issued, amended, or renewed after 1 April 2016;
- Issued, amended, or renewed between 1 January 2014 and 31 March 2016; and
- Issued, amended, or renewed between 1 January 2010 and 31 December 2013, provided they were still in effect as at 1 January 2014.
The exchange is possible if there is an agreement between Chile and the relevant jurisdiction providing for the spontaneous exchange of tax information. The agreement can be a tax information exchange agreement (TIEA), a tax treaty, or the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters.
Chile acceded to the OECD Mutual Assistance Convention as amended and the convention entered into force for Chile on 1 November 2016. Effective September 2018, Chile has signed the Common Reporting Standard (CRS) Multilateral Competent Authority Agreement and adopted measures to implement the automatic exchange of financial account information in accordance with the global standard for exchange of information developed by the OECD under the CRS.
Further, Chile signed an Intergovernmental Agreement (IGA) with the United States on 30 June 2014 to improve international tax compliance and to implement the U.S. Foreign Account Tax Compliance Act (FATCA).
Companies that close down their activities in Chile are subject to an exit tax at the rate of 35% on the portion of undistributed profits. The corporate tax paid by the company is fully or partially creditable against the exit tax.
On 5 July 2018, Chile published the list of jurisdictions having preferential regimes. The list includes 147 jurisdictions.
A jurisdiction is considered as having a preferential regime, if it satisfies at least two of the following conditions:
- The effective tax rate of the jurisdiction is less than 50% of the tax rate in Chile;
- The jurisdiction has not entered into a tax information exchange agreement with Chile or such agreement is not in force;
- The jurisdiction does not have transfer pricing rules in accordance with recommendations of the OECD or the UN;
- The jurisdiction is not compliant with OECD standards for transparency and tax information exchange;
- The jurisdiction is identified as a preferential tax regime by the OECD; or
- The jurisdiction only taxes local source income.
The list of jurisdictions that are considered as having a preferential regime is as below:
|Antigua and Barbuda||Armenia||Bahamas|
|Bhutan||Bonaire, Sint Eustatius and Saba||Bosnia and Herzegovina|
|Botswana||Bouvet Island||British Indian Ocean Territory|
|Cape Verde||Cayman Islands||Central African Republic|
|Chad||Christmas island||Cocos (Keeling) Islands|
|Comoros||Congo (the Democratic Republic of the)||Congo (Rep. of)|
|Costa Rica||Côte d'Ivoire||Cuba|
|Ethiopia||Falkland Islands [Malvinas]||Fiji|
|French Guiana||French Polynesia||French Southern Territories|
|Guyana||Haiti||Heard Island and McDonald Islands|
|Vatican City||Honduras||Hong Kong|
|Kiribati||Korea (the Democratic People's Republic of)||Kuwait|
|Mauritius||Mayotte||Micronesia (Federated States of)|
|Niger||Norfolk Island||Northern Mariana Islands|
|Oman||Palau||Palestine, State of|
|Papua New Guinea||Pitcairn||Puerto Rico|
|Saint Barthélemy||Saint Helena, Ascension and Tristan da Cunha||Saint Martin (French part)|
|Saint Pierre and Miquelon||Sao Tome and Principe||Serbia|
|Seychelles||Sierra Leone||Sint Maarten (Dutch part)|
|Solomon Islands||Somalia||South Georgia and the South Sandwich Islands|
|South Sudan||Sri Lanka||Sudan|
|Suriname||Svalbard and Jan Mayen||Swaziland|
|Syria||Taiwan (Province of China)||Tajikistan|
|Tonga||Trinidad and Tobago||Turkmenistan|
|Turks and Caicos Islands||Tuvalu||United Arab Emirates|
|United States Minor Outlying Islands||Uzbekistan||Vanuatu|
|Venezuela||British Virgin Island||US Virgin Island|
|Vietnam||Wallis and Futuna||Western Sahara|
Indirect transfers of Chilean shares are subject to capital gains tax at a rate of 35%, if any of the following circumstances exist:
- Chilean assets represent more than 20% of the fair market value of the foreign company that is transferred;
- The fair market value of the Chilean assets is greater than approximately USD 180 million; and
- The foreign entity being transferred is domiciled or incorporated in a jurisdiction considered as having a preferential regime under the Chilean domestic tax laws (see above).
The indirect transfer is exempt if the sale of shares takes place in the context of a reorganization of the business group, the shares always remain under the ownership of the same controller, and no income or higher value is generated for the transferor. If after the reorganization there is a disposal (indirect transfer of Chilean assets) generating income, then the respective taxation will be determined based on the circumstances existing at the date of disposal.
In 2015, Chile issued a resolution outlining the reporting requirements to be met by non-residents in respect of indirect transfers. The resolution provides that a declaration in the prescribed form has to be submitted to the Chilean tax authorities when such transfers are made. The declaration includes:
- Identification of the buyer, the seller, their representatives in Chile if applicable, and the relevant Chilean entity if part of the underlying assets;
- Description of the assets transferred;
- Description of the underlying assets in Chile;
- Price and payment for the transaction;
- Determination of income for the transaction and applicable tax; and
- Any other relevant information.
Generally, the declaration is to be submitted by both the transferor, the transferee, and the Chilean entity. However, if all the parties agree on the information included in the declaration, then only the transferor is required to make the submission.
The reporting requirements apply retroactively from 1 January 2013. Declarations must be submitted by the last working day of the month following the transfer.