Finance Minister Andrés Velasco forecast that the agreements to eliminate double taxation on income will cause a significant increase in the flow of investments from Australia and the United States – currently two of the country’s major trade partners – into Chile.
“These are two countries that have significant investments in Chile, which means that there is great potential for future investments. This measure will provide many more reasons for companies from the United States and Australia to come and invest in Chile, bringing with them jobs and technology and fostering growth in Chile,” the finance minister said.
In addition, Velasco stressed that these changes, which began a decade ago, only bore fruit after the legislative changes that Chile implemented recently as part of the process to join the Organization for Economic Cooperation and Development (OECD), which meant approving more demanding standards on the exchange of tax information.
The agreements, both of which will be signed very shortly, must subsequently be ratified by the respective congresses of each country. Once they have entered into effect, they will guarantee tax benefits for Chilean professionals who provide temporary services in Australia or the United States.
Likewise, they will allow Australian and US companies operating in Chile to pay taxes in the country and in exchange receive a credit from their country of origin.
Lastly, with regard to the investments made by Pension Fund Administrators, or AFP (the private institutions that administer Chileans’ pension funds and savings) overseas, the minister pointed out that these agreements “free the Chilean AFPs from paying capital gains tax on the investments that they might hold in one of these two countries in the name of Chilean depositors. In other words, they are given a more favorable tax treatment.”
It should be noted that under the administration of President Michelle Bachelet, Chile has signed similar agreements with Colombia, Belgium, Switzerland and Thailand. The country has a total of 21 agreements of this type in operation.