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Foreign investments made by Chilean-residents

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• 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.

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Certain income derived from research and development projects are excluded from the passive income definition.

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• 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.

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