3 Quick Know-hows to Remember Well on Chilean Accounting Tax Compliance
Although quite similar to the policies of most countries in Latin America, Chilean Accounting Tax Compliance has a few key differences that must not be overlooked to safeguard your business and its operations.The Republic of Chile has four main taxes, mainly Value Added Tax, or VAT, Stamp Tax, Custom Duties, and Corporate and Personal Income Taxes. These tax rates are regulated and governed by policies mandated by the government of Chile, which means that it is imperative to follow these rules for total Chilean Accounting Tax Compliance. Some of these policies are listed below:
Chilean Tax Rates
- There is a 20% income tax rate for businesses and corporations on worldwide income and capital gains.
- Non-local, or foreign companies pay their corporate income taxes to Chile for the first three years of their operations. After that period, the foreign companies will also be additionally taxed with worldwide income.
- The Chilean Value Added Tax (VAT) is at 19%.
- Chilean Accounting Tax Compliance dictates that dividends from a local to a foreign firm be taxed with 35%, with an exemption for local to local exchange.
- The withholding tax in Chile has 30% on royalties, with 35% on interest payments.
- Property tax in the Chilean Accounting Tax Compliance, on the other hand, have 1% for rural properties, and 1.2% for urban locations.
Accounting Regulations in Chile
It is the responsibility of all corporations and all businesses to file proper financial requisites and documents to the corresponding authorities on-time as required. This is to protect all assets of the corporations from possible legal claims. Here are a few reminders to take note of for a quicker process on Chilean Accounting Tax Compliance:
- The final deadlines of filing annual tax returns is set on every April 31st.
- The sole corporations required to file their audited statements include banks, financial institutions, pension plans, insurance corporations, and public-traded companies.
- Local businesses of Chile are allowed to make money transfers without experiencing exchange controls.
- Check with the 28 countries that Chile has partnered and signed Double Taxation Treaties with to have withholding taxes on international payments reduced.
- A specific corporation’s requirements may be looked into and appropriated to its corresponding tax estimations and enumerations.
Legalities on Tax in Chile
Before full efforts on Chilean Accounting Tax Compliance, it must be ensured that the foundation and establishment of the corporate or business is also correspondent to the Chilean policies. Some of which include:
- An established company or corporation in Chile is required to have at least one permanent resident of any nationality.
- Each and every Chilean company must, on its annual return, provide and submit crucial company details such as its principal address of location, together with the names and addresses of all the company’s management directors.
- To have a smooth business running in Chile and to pass the requisites of the Chilean Accounting Tax Compliance, a registered office location within the country is required.
- Before the start of actual business operations and transactions, a company must have a Chilean Tax Identification Number and must be recognized and registered for value added taxation.
- Having an official company secretary is highly suggested, but not fully required.
- All reporting employees in every Chilean firm must be registered with a professional accident insurance.
- In correspondence to the registered office location address of the company, a working license must be applied for and be obtained from the governing officials of the respective city or town. The company is obliged to pay a free for the company’s share capital.
- Upon foundation of the corporation, a business start-up document must be submitted to Chile’s National Tax Service.
Preparing for The Company’s Chilean Accounting Tax Compliance
Together with the company’s upper level management and, if any, corporate lawyers, the corporation’s tax compliance must be discussed and dealt with under all legal processes.