Learn and Get to Know the Business Corporate Laws in Chile
Chile is one of the most generous countries of Latin America and it was the first country in L.A to join OCED which made this country very stable. It is because of this, foreigners are interested in investing here to reap benefits from their commercial activities.
However, setting up business is not easy here unlike other countries of Latin America, due to the complicated corporate laws and regulations and varied cultural pattern which are faced during the incorporation phase. In this article, we delve into the business corporate laws in Chile.
Setting up a business first requires choosing the right legal structure of the company. Many prefer opening a branch office here in Chile or setting up a local company. With complicated cultural and corporate law structure, understanding the advantages and disadvantages of both is important.
Advantages of opening a branch office in Chile
A branch office is a legal entity structure which is joint with the headquarters or the parent company. In simple words, it can run on its own or independently. Thus, the branch offices must abide to the laws of domestic as well as foreign businesses and this requires in depth understanding of the both the laws before setting up a branch office in Chile.
To set up a branch office, a tax ID shall be received from the local tax authorities and tax compliance rules must be clearly understood.
Advantages of setting up a Subsidiary Company in Chile
A local company set up in Chile is an independent legal structure which can limit the losses of the parent business. For any legal issue that arises, the local entity is responsible for its action and not the parent company. Thus, the subsidiary company has a liability shield which protects the company from the losses and the liabilities of the parent company.
Another important advantage of forming a branch office in Chile is that it can create its own identity and develop its own structural framework, different than that of a parent company. This can overall give an improvement in the business plan of the company and also help in re-branding.
Confused about which legal structure best fits your business?
Despite having all the clear information, one may be perplexed about their making the right choice, hence, the best way to do is working with a local partner.
Setting up a branch office vs subsidiary office is always confusing in Chile as the complicated corporate laws make the incorporation of the business a challenging task.