– Entities engaging in business activities must pay a corporate tax called “First Category” of 17% on net income.
– An additional tax also exists. This tax applies to those who are neither residents nor residing in Chile and ranges between zero and 35% on total revenue depending on the type of income (e.g., for services, royalties, interest, transportation payments, insurance, capital gains, and dividend distributions).
In the case of utilities, the “First Category” tax can apply as a credit towards the additional tax.
– The Value Added Tax (IVA) is 19% and is paid on all goods produced domestically or imported. It also applies to commercial and industrial services. IVA does not apply to professional services. Also, under certain circumstances, IVA can be refunded through two applicable principals:
1. The exporters of goods and services can request a refund of IVA within two months of the exportation of goods or providing services to a foreign entity.
2. The tax contributor can request a refund of the remaining amount paid in IVA to compensate for the purchase of fixed assets. This is an incentive for direct investment.