Foreign investments made by Chilean-residents
Foreign tax credits system
- New regulation standardizes the treatment of foreign tax credits. The same system applies whether the foreign jurisdiction has a valid tax convention for the avoidance of double taxation with Chile or not.
- Redefinition of the applicable credit limits.
- Extends the availability of credits to be used:
- Dividend and profit distributions;
- Income for the use of intangibles;
- Professional or technical services and export services;
- Income derived from dependent or independent labor;
- Income attributed to PE located abroad;
- Passive income obtained by controlled foreign companies; and,
- Income derived from tax treaty jurisdictions with which Chile undertook to grant a foreign tax credit.
Passive income obtained by controlled foreign companies
Certain income derived from research and development projects are excluded from the passive income definition.
Tax haven regulations
- For a territory or jurisdiction to qualify as a harmful preferential tax regime, one of the following conditions must be satisfied: (a) the effective income tax burden must be lower than 30%, or (b) foreign-sourced income must not be levied.
- Nevertheless, territories or jurisdictions that have a valid convention that allows the exchange of tax information with Chile, whether bilateral or multilateral, are not considered as harmful preferential tax regimes.