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:
    1. Dividend and profit distributions;
    2. Income for the use of intangibles;
    3. Professional or technical services and export services;
    4. Income derived from dependent or independent labor;
    5. Income attributed to PE located abroad;
    6. Passive income obtained by controlled foreign companies; and,
    7. 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.

Jaime Carey
Managing Partner
+56 2 2928 2224
jacarey@carey.cl
Jessica Power
Partner
+56 2 2928 2214
jpower@carey.cl

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