The principal forms of business organization in Chile are the corporation (sociedad anonima), which may be open (publicly traded) or closed (not publicly traded); limited liability company (sociedadade responsabilidad limitada); branch of a foreign company (agencia); general partnership (sociedad colectiva); and limited partnership (sociedad en comandita). A nonresident company or individual can also operate in Chile by appointing a Chilean resident individual or entity to act as a representative (representante).

Corporations, limited liability companies, and partnerships established in Chile, as well as business entities established abroad, are treated as separate taxable persons for income tax purposes.


Investors must transfer foreign capital into Chile under one of the various laws and provisions that regulate inward investment; they are free to choose which. Most use article 47 of the Central Bank Law (chapter 14 of the Central Bank Foreign Exchange Regulations), Decree Law No. 600 of 1974 (as amended).

Under article 47, the minimum investment is US$10,000, the foreign capital must be converted into Chilean pesos (Ch$) through the commercial banks, and the foreign investment must be registered with the central bank. Profits may be repatriated after the first year, although interim dividends may be remitted even sooner. Capital also may be repatriated after twelve months.

Under Decree Law No. 600, a contract is drawn up between the government and each foreign investor on a case-by-case basis. Typically, however, the minimum investment is US$25,000, free access to foreign exchange for the remittance of capital and profits is guaranteed, and the investor undertakes not to repatriate capital during the first year, although profits can be repatriated when earned. Interim dividends may be remitted before the end of the first year. Tax benefits can also be written into these contracts.


There are no laws requiring Chilean participation in the ownership or management of general business ventures. Some exceptions apply in the case of coastal freight shipping.


A number of incentives are available in Chile.

Industry Incentives

The government subsidy for planting forests has expired, but a bill that will renew the subsidy on a limited basis is in Congress.

Companies that enter into a petroleum operating contract with the Chilean government pay either the normal corporate taxes or a 50% substitute tax on the fees received. Reductions of up to 100% of the normal corporate taxes or the substitute tax may be granted, however, depending on the degree of risk involved for the contractor. Taxes, duties, and levies on imports of machinery needed to fulfill the contract may be similarly reduced. Foreign nonresident subcontractors are liable for a flat 20% tax on their gross fees.

Companies that enter into a contract with the Chilean nuclear energy authority, the Chilean Commission of Energy, to explore, exploit, or process radioactive substances may be granted tax treatment similar to that applicable to petroleum contractors.

Free Trade Zones

Free trade zones have been established at the ports of Arica, Iquique, and Punta Arenas. The Arica zone is available only to the electronics, metal-mechanical (metalmecanica), and chemical industries. Goods and raw materials imported into a free trade zone can be assembled, finished, connected, manufactured, or transformed and then re-exported or sold to customers in another part of the country.

All operations within the free trade zones are exempt from corporate income tax and value added tax, and imports of foreign goods into the zones are exempt from import duties. Sales and transfers of merchandise from a free trade zone to another area of the country normally generate an import duty and value added tax liability. However, sales to some adjacent areas are subject only to a single 6% tax, which increases or decreases in the same proportion that the current 11% customs duty rate increases or decreases.

Regional Incentives

Employees who earn income from activities performed in the First Region, which is located in the far north of Chile, or the Eleventh Region, Twelfth Region, or Chilo' Province, which are located in the far south, may deduct a special allowance from that income for personal income tax purposes. Investors in Arica and Parincota claim a tax credit equal to 20% of the cost of new depreciable fixed assets with a life of at least three years as well as for specified purchases of real estate. Businesses operating in the Tierra del Fuego or the Antarctic territories are also granted special tax incentives.

Export Incentives

The principal incentives for exports are as follows:

  • Exporters may carry out manufacturing processes in private, bonded warehouses without paying import duties on foreign raw materials or parts used in the process, provided that the finished products are exported within a specified period.
  • Exports are zero rated for value added tax purposes(see "OTHER TAXES").
  • A drawback (refund) of charges affecting the cost of inputs is granted equal to 10%, 5%, or 3% of the value of nontraditional exports if the aggregate free-on-board value of such exports in any calendar year does not exceed US$11,612,000, US$17,418,000, or US$20,901,600, respectively.
  • Exporters may obtain a reimbursement of customs duties paid on imports of raw materials, semi-manufactured products, and parts incorporated in exports. If the drawback described in 3 is also available, the exporter must choose between drawback and reimbursement.
  • Exporters that import capital goods may defer payment of customs duties on those imports for up to three to seven years. If sufficient exports are made, the customs duty liability is eliminated. The Treasury grants exporters purchasing new capital goods produced in Chile a loan equal to 73% of the customs duties in force. This loan must be repaid over three to seven years. Both the deferred customs duties and the loan bear interest. If sufficient exports are made, the loan liability is also eliminated.

Investments under Decree Law No. 600 of 1974

Investors who make their investment under Decree Law No. 600 of 1974 can ask for a guaranteed aggregate tax rate of 42% to apply to profits from the investment for ten years (see "WITHHOLDING TAXES"). If the investment amounts to US$50 million or more, this guarantee can be extended to twenty years, and the continued application of various tax rules in their current form can be guaranteed for the same period. Thus, for example, the right currently available to carry forward losses indefinitely can be secured for at least twenty years even if the right of other taxpayers to carry forward losses happens to be curtailed sooner by a change in the law.

The information in this article was correct as of 9 July 1996.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

For further information contact Anthony Cook, Deloitte & Touche, Santiago, Chile on Tel: +56 2 638 4186, Fax: +56 2 639 1522.