International Tax 2026 Comparisons

The main domestic sources of international tax law in Chile are: the Chilean Constitution, which sets forth certain principles regarding taxation, guarantees individual’s economic rights and states that the exercise of sovereignty recognises as a limitation respect for the essential rights that emanate from human nature, as guaranteed by the Constitution and international treaties ratified by Chile that are currently in force. Additionally, there are several tax laws which refer to different kind of taxes, such as the Income Tax Law (ITL), Tax Code, VAT Law, Stamp Tax Law and Real Estate Tax Law, among others. These instruments are supplemented by a wide range of special laws which include tax provisions, as well as certain regulations enacted by the executive branch to implement laws.

In addition, the Chilean tax authority (“Chilean IRS”) issues:

• circulars which are interpretations of general application;
• resolutions aimed at regulating matters of an administrative nature; and
• specific rulings (oficios) which are binding opinions issued in response to specific taxpayer queries.

While these instruments are formally binding only on the Chilean IRS officials, they carry considerable practical weight and taxpayers routinely rely on them for planning purposes. Academic commentary by scholars also contributes to the interpretation of principles of international taxation.

Judicial precedents from the tax courts, the Courts of Appeals and the Supreme Court play a growing role in shaping Chilean domestic and international tax law. Although Chile does not formally apply the doctrine of binding precedent (stare decisis), Supreme Court rulings are highly persuasive in the lower courts and for taxpayers in general.

Chile has an extensive treaty network comprising double taxation agreements (DTAs) with the following countries: Argentina, Australia, Austria, Belgium, Brazil, Canada, China, Colombia, Croatia, Czech Republic, Denmark, Ecuador, France, India, Ireland, Italy, Japan, Malaysia, Mexico, the Netherlands, New Zealand, Norway, Paraguay, Peru, Poland, Portugal, Russia, Spain, South Africa, South Korea, Sweden, Switzerland, Thailand, the UAE, the United Kingdom, the United States of America, and Uruguay.

The highest hierarchy of legal sources in Chile is the Constitution, followed by the tax laws in second place. International treaties ratified and enacted in accordance with the Constitution have the force of domestic law. In practice, treaty provisions offering more favourable treatment to a taxpayer will take precedence over conflicting domestic rules.

Below the legal sources mentioned above are secondary, non-binding sources such as Supreme Court rulings and Court of Appeal rulings, which are persuasive in terms of lower court decisions.

Guidance issued by the Chilean IRS does not bind the courts or taxpayers, but nonetheless provides important information on the administration’s interpretative position.

Chile has been a full member of the OECD since 7 May 2010 and generally follows the OECD Model Tax Convention (“OECD Model”) both in its treaty practice and in the interpretation of its domestic international tax rules. The Chilean IRS has expressly acknowledged the relevance of the OECD commentaries as an interpretative tool, even where specific treaty provisions pre-date Chile’s OECD membership.

Chile’s more recent treaties are substantially aligned with the OECD Model, incorporating updated Base Erosion and Profit Shifting (BEPS)-related provisions such as principal purpose tests (PPTs), limitation of benefits (LOB) provision clauses and treaty shopping anti-abuse rules.

Chile also reserves certain positions with respect to the taxation of capital gains on indirect transfers, consistent with its domestic rules under the domestic ITL and the taxation of technical services.

Some tax treaties entered into by Chile follow the UN treaty model regarding technical services and permanent establishment considerations, granting broader taxation powers to the source country.

None of the tax treaties entered into by Chile contain a binding arbitration clause.

Considering that Chile has an integrated tax system according to which corporate tax paid by a legal entity may be used as a credit against foreign owner/shareholder tax, tax treaties entered into by Chile do not provide a reduced rate on dividends abroad (the so-called “Chile Clause”).

Chile signed the OECD Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the Multilateral Instrument or MLI) which entered into force in Chile on 1 November 2021, following ratification by the Chilean Congress.

Chile opted to apply a broad range of MLI provisions to its tax treaties, including: the principal purpose test as the anti-abuse standard; the preamble language on treaty purposes; and anti-fragmentation rules for permanent establishment (PE) purposes.

Note that Chile did not adopt binding arbitration.

Chile applies a worldwide taxation system. Article 3 of the Chilean ITL establishes that persons domiciled or resident in Chile are subject to tax on their worldwide income, while persons without domicile or residence in Chile are subject to tax only on their Chilean-source income.

Income is considered to be sourced in Chile if it arises from assets located in the country or from activities carried out in Chile.

Chile introduced an indirect transfer rule, based on which gains derived from the disposal of shares or interests in foreign entities are considered Chilean source income, if certain thresholds are exceeded. This provision has significant implications for cross-border M&A transactions involving indirect transfers of Chilean assets.

Foreign source income is taxable in Chile on a cash basis, that is, when income is received in Chile by taxpayers, unless controlled foreign company (CFC) rules apply.

Tax residence is determined in Chile by two concepts: domicile and residence.

An individual is considered to have “residence” in Chile if they remain in Chile, whether continuously or not, for a period or periods which in total add up to more than 183 days within any 12-month period.

The concept of “domicile” is more subjective, as it refers to the place where a person demonstrates the intent to remain. The existence of domicile or lack thereof must be evidenced before the Chilean IRS, which mainly interprets this concept based on economic factors.

Either residence or domicile suffices to trigger worldwide tax liability. The ITL provides a three-year grace period for newly resident individuals who are not Chilean nationals: during the first three years following the establishment of domicile or residence in Chile, only Chilean-source income is subject to Chilean tax. The tax authority may extend this period in exceptional circumstances. This rule has significant implications for inbound assignment planning and for individuals relocating to Chile.

Individuals moving away from Chile have an obligation to file a declaration informing the IRS of this situation. In this regard, the Chilean IRS is reluctant to consider that an individual is no longer domiciled or resident in Chile and to release them from their domestic tax obligations.

Individuals must file an annual income tax return in April each year. Individuals resident or domiciled in Chile are subject to progressive annual personal income tax with rates ranging from 0% to 40% (the top marginal rate of 40% is applicable to annual income exceeding approximately USD200,000). This tax applies to all income received during the tax year from worldwide sources.

Employment income is subject to withholding on a monthly basis at the same progressive rates as annual income; at financial year-end, the taxpayer may use the employment tax withheld by their employer against their personal income tax.

Resident individuals who are shareholders or partners in Chilean entities must include within their personal taxable income dividends or profits distributed by local companies, according to the following rules:

• The corporate income tax paid at the company level can be fully or partially offset against the personal income tax due by the shareholder. Under the general regime (partially integrated regime), only 65% of the corporate tax paid is creditable against their personal income tax, and this may result in an effective overall tax burden of approximately 44.45% on distributed profits. The new administration that took office in Chile sent a tax bill of law in April 2026, which among other measures, proposes to fully integrate the tax system. This means that the corporate tax paid at the company level will be fully creditable against shareholders’ personal income taxes.
• On the other hand, individuals who receive profits paid out of a company subject to the special small and medium enterprise (SME) regime may use 100% of the corporate income tax paid at a company level against their personal income tax.

Regarding foreign income, as explained above, it is taxable, as a general rule, on a cash basis, unless the CFC rules apply. Foreign tax credits are available, subject to limitations.

Chile does not contemplate a participation exemption regime for resident individuals.

Non-resident individuals that obtain Chilean-source income are subject to withholding tax (WHT). The Chilean payer is responsible for withholding and paying the tax to the Chilean IRS through form No 50. The tax must be declared and paid no later than the 12th day of the month following that in which the payment was made to the foreign beneficiary.

The general WHT rate is 35%, but specific reduced rates apply to particular categories of income:

• Dividends – these are generally subject to 35% WHT. Against the 35% WHT, it is possible to credit all or part of the corporate income tax paid at the company level, depending on the tax regime applicable to the company paying out the dividend.
• Interest – generally speaking, interest is subject to 35% WHT. However, interest paid to foreign or international financial institutions or banks may be subject to 4% WHT under a domestic provision.
• Royalties – these are generally subject to a 30% WHT rate. Nevertheless, a reduced 15% rate is available for payment for the use of invention patents, trade marks and other intellectual property rights, including software. Software that qualifies as standard software under the law may be exempt from WHT in Chile.
• Technical services – these are generally subject to 15% WHT. The rate increases to 20% if the recipient of the payment is a resident of a country considered to have a preferential tax regime according to the ITL.

These rates may be reduced or eliminated under applicable DTAs. For the application of DTA reduced rates the beneficiary must evidence its residence through a tax residence certificate. Other formalities are also required.

A legal entity is considered to be resident in Chile and therefore subject to Chilean corporate tax on its worldwide income if it is incorporated in Chile.

Chile does not recognise the “place of effective management” as a criterion to determine the residence of legal entities, though the concept may be relevant in the interpretation of treaty tie-breaker rules for entities that could be considered resident in two jurisdictions under their respective domestic laws.

Chile introduced a statutory definition of PE through a tax reform in 2020. Prior to this reform, the concept was applied primarily through treaty provisions and the Chilean IRS administrative guidance.

The domestic definition broadly follows Article 5 of the OECD Model, stating that a PE means a fixed place of business through which the business of an enterprise is wholly or partly carried on, whether or not it is used exclusively for such purpose, such as a branch of a foreign company, facilities, construction sites, or a factory, etc.

A PE is also deemed to exist where a person is acting in Chile on behalf of a foreign company and, in doing so, habitually concludes contracts, or habitually plays the principal role leading to the conclusion of contracts that are routinely concluded without material modification by the enterprise.

Chile’s more recent treaties, and those modified by the MLI, incorporate the post-BEPS PE provisions, including the anti-fragmentation rules and the revised dependent agent standard. Older treaties may retain more traditional definitions.

Income derived from immovable property located in Chile, including rental income and gains from the sale of real estate property, is Chilean-source income and is subject to Chilean tax.

For resident individuals or legal entities, rental income from Chilean real estate property is, generally speaking, considered ordinary income and therefore must be included in their respective taxable bases.

Capital gains are generally taxable – however, individuals may benefit from specific treatment of capital gains from the disposal of real estate:

• Capital gains on the sale of real estate property may be exempt from income tax up to 8,000 UF, or approximately USD360,000 (a UF orunidad de fomento is a specific unit of currency used in Chile for finance, banking and real estate). This benefit may be used by taxpayers in one or multiple transactions in the disposal of property, until the total exempt amount is exhausted during the lifetime of the taxpayer.

• Once the exemption is exhausted, any gain will be taxed at 10% income tax, subject to requirements.
• Some residential immovable property enjoys additional tax benefits, such as an exemption on rental income, exemption from inheritance tax and reduced stamp tax where the property is acquired through a loan. These benefits apply to property which does not exceed 140 square metres and is destined for residential purposes. 
• Capital gains arising from immovable property acquired prior to 2004 may be fully exempt from taxation, subject to requirements.

For non-residents, rental income and capital gains from Chilean immovable property are subject to WHT at 35%. Under Chile’s DTAs, gains on immovable property are generally taxable in the state where the property is situated (consistent with Article 6 of the OECD Model), affirming Chile’s right to tax these gains as the source state.

If a legal entity is resident in Chile it will be subject to corporate income tax on its worldwide income.

Under the general tax regime (partially integrated tax regime) a company is subject to 27% corporate tax on its accrued and perceived income. Expenses are deductible when paid or accrued, as long as they are necessary or have the potential to generate taxable income. Taxpayers subject to this regime have the obligation to carry full accounting records in Chile for tax purposes.

According to the text of a bill of law sent to Congress, if approved, the corporate tax rate will gradually be reduced from the current 27% to 23% as from 2029 onwards.

Under the SME tax regime, a company is subject to a transitory 12.5% corporate tax on its perceived income. Such transitory reduced tax rate applies for financial years 2026 and 2027 and increases to 15% for year 2028. As from 2029, the statutory corporate tax rate for SMEs will increase to 23%. Under this regime, expenses are deductible when paid. In other words, legal entities declare income on a cash basis. Additionally, taxpayers may carry full or simplified accounting records.

Business profits obtained by non-resident entities are generally taxable in Chile at a 35% rate. Reduced rates may apply in the case of interest and royalty payments, technical assistance, lease of movable fixed assets, and insurance, etc.

Under the treaties signed by Chile, business profits are only taxable in the residence state, unless the taxpayer also triggers a PE in Chile.

Dividends

Dividends distributed by Chilean companies to non-resident shareholders are subject to WHT at a rate of 35%. The company paying the dividend has the obligation to withhold and declare the tax before the Chilean IRS.

A credit is available for corporate tax paid at the company level.

Shareholders resident in non-treaty countries

Shareholders who receive dividends paid out of a company subject to the general tax regime are entitled to use 65% of the corporate tax paid as a credit against the 35% WHT, thus, the total tax burden on profits sourced in Chile amounts to 44.45%.

It is important to note that the new administration that took office in March 2026 sent a tax reform bill to Congress that proposes to fully integrate the tax system. If approved, the corporate tax paid will be 100% creditable against shareholder taxation, regardless of the residence of the shareholder, reducing the total tax burden to 35%. 

Shareholders resident in tax-treaty countries

If the shareholder is resident in a country with a tax treaty with Chile, 100% of the corporate income tax is creditable against the 35% WHT – in other words, the total tax burden on Chilean profits amounts to 35%.

Chile’s tax treaties do not reduce the rate of withholding tax on dividends, as they contain a special clause which states that, as long as Chile provides a credit for the corporate income tax paid, no reductions will apply (the so-called “Chile Clause”).

Interest

Interest paid to non-residents is subject to WHT, at a general rate of 35%.

Reduced rates apply in several circumstances, such as a reduced 4% for loans granted by foreign banks or foreign and international financial institutions.

Treaty rates apply a reduced 10% or 15% WHT rate.

Chile has set forth thin capitalisation (“thin cap”) rules under which companies that are paying interest at reduced rates and that exceed a 3:1 debt-to-equity ratio may be subject to a thin cap tax of 35% over the amount of interest deemed excessive. Nevertheless, interest is still tax deductible according to the general rules.

Royalties

Royalties are generally subject to a 30% WHT rate, but a reduced 15% rate is available for payment for the use of invention patents, trade marks, industrial drawings and tailor-made software, among other intellectual property rights.

Software that qualifies as standard software under the law may be exempt from WHT in Chile. However, payments made from Chile to overseas countries, while exempt from WHT, are still subject to 19% VAT. 

Capital gains on the disposal of assets by Chilean residents are considered Chilean source income and are therefore subject to 35% WHT. Reduced rates are available under a few of Chile’s tax treaties.

The tax must be withheld and paid by the buyer at an interim rate of 10% over the purchase price or 35% over the gain. It is possible to request the Chilean IRS to certify the taxable gain. The foreign beneficiary will have the obligation to file an annual tax return and declare and pay the taxable gain using the WHT as a credit against its tax liability.

Chile has an indirect transfer provision according to which, gains derived from the disposal of shares or interests in foreign entities may be taxable if certain conditions are met or thresholds are exceeded.

The Chilean-source portion of the gain is subject to income WHT at 35%. This rule has important implications for cross-border M&A and private equity transactions involving the indirect transfer of Chilean companies, as buyers and sellers must consider potential Chilean tax exposure even in a case where all the parties are non-Chilean.

Non-resident individuals who obtain income from employment are generally subject to income WHT at 15% on their Chilean-source employment income.

Where there is a DTA, Article 15 standard applies to short-term assignments if:

• remuneration derived by a resident of the other contracting state in respect of employment exercised in Chile is exempt from Chilean tax if the employee is present in Chile for 183 days or fewer in any 12-month period beginning or ending in the fiscal year concerned;
• the remuneration is paid by an employer not resident in Chile; and
• the remuneration is not borne by a PE of the employer in Chile.

Chile does not have specific legislation addressing the tax treatment of remote work in cross-border scenarios. The Chilean IRS has issued limited administrative guidance acknowledging that the place where employment services are rendered determines the source of income; accordingly, work performed remotely from Chile by a resident for a foreign employer is considered Chilean-source employment income subject to employment tax.

Any Chilean-source income which does not have a specific treatment is generally taxed at a 35% withholding tax rate. The treaties signed by Chile usually allow for the source country to tax other income if the income originated in the source country.

As an OECD member and adherent to the BEPS Inclusive Framework, Chile has committed to applying Amount B as a simplified and streamlined approach to the pricing of baseline marketing and distribution activities. However, Chile has not yet signed the Pillar One MLI, nor enacted any specific legislation to implement Amount B.

Chile has actively participated in the OECD Inclusive Framework negotiations and public consultations on the Multilateral Convention for Pillar One Amount A. However, Chile has not yet signed the Pillar One MLI, nor enacted any specific legislation to implement Amount A.

Chile has not yet enacted legislation to implement the Global Anti-Base Erosion (GloBE) rules under Pillar Two. At the time of publication, no formal bill had been introduced to the Chilean Congress.

Although Chile enacted a tax reform in 2024 which introduced significant changes to transfer pricing, anti-avoidance rules and information exchange, it did not include Pillar Two provisions.

As Pillar Two has not been enacted in Chile, there are no domestic deviations to report at this time.

Given Chile’s corporate tax rate of 27%, Chilean subsidiaries of foreign multinationals are unlikely to be subject to top-up taxation under Pillar Two in most circumstances, as the effective tax rate generally exceeds the 15% minimum.

Chile does not impose a standalone digital services tax (DST) on revenues derived from digital services.

Instead, Chile extended its existing VAT framework to cover digital services delivered by foreign providers to Chilean consumers. Under the VAT Law and the relevant Chilean IRS guidance, foreign digital service providers whose services are consumed in Chile must register with the Chilean IRS (using a simplified online registration system), charge 19% Chilean VAT on their services and remit the tax. The Chilean IRS maintains a publicly available register of foreign digital service providers.

This regime covers streaming platforms, software as a service, e-commerce intermediation, cloud services and online gaming, among other digital services.

Income tax treatment of payments to foreign digital providers follows existing withholding rules depending on the characterisation of the payment (royalties, services or business profits).

As a general rule, payments abroad for digital services are exempt from WHT, but subject to VAT.

General Anti-Avoidance Rule

The Tax Code has had a General Anti-Avoidance Rule (GAAR) in force as from 2015. The GAAR sets forth a presumption that taxpayers are considered to act in good faith, unless proven otherwise. This means that the effects of the acts, contracts or events that a taxpayer undertakes will be recognised in accordance with the legal nature of such acts, contracts or events.

However, such presumption does not apply to those taxpayers who, through their acts or actions, elude a taxable event by means of an abuse of the law or simulation.

The burden of proof for the existence of tax avoidance due to abuse or simulation lies with the Chilean IRS. Additionally, the existence of abuse of law or simulation must be declared by a tax court.

Abuse of law

There is abuse of law for tax purposes when a material or legal act, individually or collectively considered, has no significant legal or economic consequences for the taxpayer or a third party, other than:

• avoiding a taxable event in whole or in part;
• reducing the taxable base or tax liability; or
• postponing or deferring the triggering of a tax.

In general terms, Chilean law follows what in international doctrine is known as the “business purpose test”, which aims to reveal the economic or legal substance over the forms presented in a particular operation or transaction.

The Chilean GAAR enables the taxpayer to opt between conduct and alternatives or mechanisms available pursuant to the tax legislation. Therefore, the sole circumstance that the same juridical or economic result may be achieved by carrying out juridical acts or transactions that cause a higher tax burden is not constitutive of an abusive act.

Simulation

Simulation for tax purposes is when the legal acts or transactions carried out by the taxpayer contribute to disguising a taxable event, the elements that trigger a tax liability, or the amount or date of occurrence of the taxable event.

Catalogue of Tax Schemes

Since 2021, the Chilean IRS has published a “Catalogue of Tax Schemes”, which is updated annually. This is a list of aggressive tax planning schemes identified by the Chilean IRS as potentially abusive.

The catalogue serves as a transparency and deterrence tool. Taxpayers who carry out schemes and implement structures included within the listed schemes should be aware that the tax authority may challenge the scheme under the GAAR.

The catalogue includes several structures and schemes covering areas including dividend stripping, artificial fragmentation of transactions, and misuse of treaty benefits.

Tax Evasion

Tax evasion refers to unlawful conduct intended to reduce taxable income, falsify records or deceive the tax authority, and is subject to criminal sanctions under Article 97 of the Tax Code (see 6.2 Criminal Penalties).

Chile has a comprehensive set of Specific Anti-Avoidance Rules (SAAR) that complement the GAAR, which are explained below.

• Transfer pricing rule: according to this provision, transactions between related parties must be at arm’s length. In this regard, Chile follows the OECD Transfer Pricing Guidelines as the primary interpretative framework. The Chilean IRS has the authority to reassess prices and values if the one agreed by the parties is not at arm’s length. Where an adjustment is made by the tax authority, a 40% penalty tax applies on the difference determined.
• CFC rules: according to Chilean general tax rules, foreign income is taxable in Chile on a cash basis. However, passive income earned by foreign entities controlled by Chilean residents (a CFC) is attributed to the Chilean resident on an accrual basis. Control is defined broadly to include direct and indirect holdings and acting-in-concert arrangements. According to this provision, passive income includes, among other things, dividends of non-controlled entities received by the CFC, interest, royalties in certain cases, income from real estate (except if the CFC is a real estate company) and capital gains arising from the disposal of certain assets.
• Thin capitalisation rules: these rules apply when a Chilean entity and the foreign lender are related or deemed related and the loan qualifies for a reduced WHT rate on interest and other loan charges, whether under domestic rules or under a double tax treaty. Excessive indebtedness will be deemed to exist when the Chilean debtor’s total indebtedness (including entities incorporated or resident abroad, be they related or not to the debtor) exceeds three times the taxpayer’s tax equity at the end of the respective year (3:1 debt/equity ratio). If the Chilean entity is excessively in debt, interest on the portion of the loan deemed excessive is subject to a thin capitalisation tax of 35%, which is payable by the borrower, with the WHT paid available as credit.
• Preferential tax regimes blacklist: transactions with entities located in jurisdictions listed as preferential tax regimes are subject to penalties and restrictions.

The Chilean IRS periodically issues a list of jurisdictions which are considered to have preferential tax regimes, mainly due to the fact that such jurisdictions have not implemented information exchange agreements with Chile or do not comply with the international standards of fiscal transparency of the Global Transparency Forum.

As of 2025, approximately 102 jurisdictions were included on this list.

The consequences of operating with entities in blacklisted jurisdictions include:

• the presumption that all income obtained by a CFC resident in a preferential tax regime is passive income, and therefore subject to taxes in Chile on an accrued basis;
• certain royalty payments made to entities resident in preferential tax regimes are subject to a WHT overcharge; and
• in the case of the indirect transfer provision, if the entity being disposed of (owner of Chilean assets) is resident in a preferential tax regime, capital gain is triggered in Chile regardless of the ownership percentage of the foreign entity being transferred.

General Reporting Obligations

As a general rule, taxpayers have the obligation to declare their worldwide income on an annual basis through an annual income tax return.

Additionally, taxpayers have an obligation to file sworn statements informing the Chilean IRS about certain transactions, such as:

• loans with foreign related parties that indicate the local debtor is excessively indebted;
• other transactions with foreign related parties;
• disposal of real estate;
• lease agreements with third parties; and
• transactions carried out in a stock exchange, etc.

Banks and Financial Institutions

Banks and financial institutions must report to the IRS the balance or value and the total amount of credits made to the current accounts of individuals or legal entities when the balance or total credits show a daily, weekly or monthly movement equal to or greater than 1,500 UF (approximately USD70,000), regardless of their legal nature.

Transfer Pricing Documentation

According to the transfer pricing provision, taxpayers engaged in transactions with foreign related parties are required to prepare transfer pricing documentation. Large multinational groups with annual consolidated revenues exceeding EUR750 million are required to prepare a country-by-country report (CbCR), a master file and a local file.

Additionally, taxpayers engaged in transactions with related parties abroad must file Form 1907, which reports the nature, amounts and transfer pricing methods applied to cross-border related-party transactions. This form is due annually in June.

Common Reporting Standard

Chile has implemented the OECD Common Reporting Standard (CRS) for the automatic exchange of financial account information, as from 2018. Under Resolution No 48 of 2018 of the IRS, Chilean financial institutions (banks, brokers, insurance companies and fund managers) are required to identify account holders who are tax residents of foreign jurisdictions and report their account information to the Chilean IRS, which in turn exchanges this information with foreign tax authorities.

The Chilean IRS is the primary tax authority responsible for the administration, assessment and collection of direct and indirect taxes in Chile.

The tax authority has broad powers under the Tax Code to request information; conduct audits and examinations of taxpayers’ books, accounts and records; and issue assessments where it determines that tax has been underpaid.

The Chilean IRS’s powers include:

• the power to request information from taxpayers and third parties;
• the power to examine the accounting records and documentation of any taxpayer or related party;
• the power to summon taxpayers in order to provide information and documentation regarding specific transactions;
• the power to adjust the price of transactions using the reassessment power, under which, the IRS may disregard a transaction price and reassess its value according to the fair market value;
• the power to carry out unannounced visits to inspect the premises of taxpayers; and
• the power to obtain banking information subject to secrecy (only with the taxpayer’s consent or with prior judicial authorisation from the competent tax and customs court) under a specific procedure.

The statute of limitations for issuing tax assessments and collecting taxes is three years, counted from the deadline for filing the corresponding tax return. Such three-year period is extended to six years for cases involving tax evasion or non-filing of tax returns.

The general penalty framework in tax violations is generally the same for cross-border and domestic tax violations. The Chilean IRS is responsible for imposing and collecting administrative tax penalties.

Criminal sanctions require the intervention of the courts, and cases are only initiated at the request of the Chilean IRS.

Administrative penalties include:

• a penalty payment, usually a percentage of the unpaid tax or a pre-determined amount;
• a penalty interest payment which is calculated based on the current interest rate and which accrues on a daily basis; and
• other measures, such as closure of the business premises, in more severe cases.

The Chilean IRS has a forgiveness policy for prompt payment of unpaid taxes, resulting in a percentage of the tax debt being forgiven automatically upon online payment by the taxpayer. The Chilean IRS may grant further forgiveness of interest and penalties in certain cases, at the taxpayer’s request.

Regarding cross-border penalties, there is a specific penalty applicable to transfer pricing adjustments, consisting of 40% of the difference detected by the Chilean IRS, and in some cases, the Chilean IRS may apply an additional 5% penalty if the taxpayer does not co-operate during the audit process.

Penalties may be challenged before the tax courts in the first instance and before the Courts of Appeal on further review. The Chilean IRS may grant total or partial forgiveness of interest and penalties, where there is 100% prompt payment of the underlying tax, pursuant to the annual condonement decree issued by the Ministry of Finance.

The Chilean Tax Code contains specific criminal penalties regarding different types of tax evasion and tax fraud situations:

• malicious presentation of false tax declarations involves a penalty of 100% to 300% of the amount of tax evaded, and could involve imprisonment for three to five years;
• fraudulent claims for tax refunds involve a penalty of 100% to 400% of the amount unduly claimed, and could involve imprisonment for three to 15 years; and
• malicious omission of tax declarations involves a fine of 50% to 300% of the taxes due, and could involve imprisonment of 541 days to five years.

While legal entities cannot be imprisoned, they are subject to significant financial penalties and the court may, in extreme cases, impose forced dissolution.

Legal representatives and board members of legal entities may be subject to penalties on behalf of the entity, in certain cases.

The Chilean system grants the IRS the power to initiate criminal tax proceedings.

Once the Chilean IRS decides to proceed criminally, it files a criminal complaint with the competent criminal court, which refers the matter to the Public Prosecutor’s Office. The criminal investigation is then conducted by public prosecutors, with the Chilean IRS acting as a party to the case. The administrative and criminal proceedings may run concurrently.

The 2024 Tax Reform introduced mechanisms to facilitate the prosecution of criminal cases, such as, a simplified procedure to disregard bank secrecy in the case of tax crimes, and enhanced whistle-blower protections to encourage the reporting of large-scale tax fraud schemes, among others.

Chile’s framework for international administrative co-operation in tax matters rests on three principal pillars:

• The OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters – Chile signed the Convention in 2013 and it entered into force in 2016. The Convention provides the legal basis for information exchange (on request, spontaneously and automatically), tax collection assistance and service of documents. Chile reserved the right not to provide assistance in the recovery of any tax or in the recovery of an administrative fine, with respect to all taxes, and not to provide assistance in the service or transmission of documents.
• Bilateral double taxation agreements – the exchange of information clause contained in Chile’s DTAs provides the legal basis for on-request and spontaneous exchanges with treaty partners.
• Tax information exchange agreements – Chile has concluded this kind of agreement with certain jurisdictions that do not have a full DTA in place, thereby extending the information exchange framework.

Domestic implementation of exchange of information commitments is provided for in Article 6 of the Tax Code, as amended by successive reforms.

Chile participates in all three modalities of information exchange recognised under the OECD standards:

• Exchange on request – the Chilean IRS processes requests from foreign competent authorities and submits requests to foreign authorities through the established channels under the applicable double tax treaty.
• Automatic exchange – Chile participates in the automatic exchange of financial account information under the CRS. Chile also automatically exchanges CbCRs with Inclusive Framework members and receives CbCRs from other jurisdictions for Chilean MNE groups.
• Spontaneous exchange – competent authority staff at the Chilean IRS identify information of potential relevance to foreign tax authorities and transmit it spontaneously, pursuant to the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters and treaty obligations.

In addition to mutual agreement procedures (MAPs) and advance pricing agreements (APAs) (see 8. Mutual Agreement Procedures and Arbitration and 9. Dispute Prevention), Chile participates in the following forms of multilateral tax collaboration:

• BEPS Inclusive Framework – Chile adheres to the G20/OECD BEPS Inclusive Framework and has committed to implementing the four minimum standards: CbCR, prevention of harmful tax practices, prevention of treaty abuse, and effective dispute resolution.
• OECD Tax Administration Forum – Chile is an active member of the Inter-American Centre of Tax Administrations (CIAT), through which it engages in capacity building, best-practice exchange, and joint projects with other Latin American tax administrations.
• Joint and simultaneous audits – Chile has the legal framework under the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters to participate in joint and simultaneous audits with foreign tax authorities, though formal joint-audit programmes have not been widely implemented. The Chilean IRS has conducted co-ordination calls and information-sharing exercises with major treaty partners in specific high-risk cases.
• ICAP – Chile has expressed interest in the OECD’s International Compliance Assurance Programme (ICAP) but had not formally participated in ICAP rounds at the time of publication.

All tax treaties entered into by Chile and third parties include a MAP provision. This procedure is contemplated to prevent and solve any controversy regarding the interpretation and application of tax treaties. Chile has committed to the implementation of the minimum standard established in Action 14 of BEPS, which should bilaterally modify its tax treaties to include Article 25 (2): “Any agreement reached should be implemented notwithstanding any time limits in the domestic law of the Contracting State”.

Multilateral MAPs have not yet been implemented in Chile.

The Chilean IRS issued guidelines for implementing MAPs in Chile in 2022.

As a general rule, a MAP must be triggered within the term indicated in the treaty, unless the latter does not specify a term for such purpose, in which case, the MAP may be initiated at any time. In all cases, the Chilean IRS guidance indicates that it is necessary to take into consideration the statute of limitations established in Chilean laws. The latter is relevant as the Chilean Tax Code allows a refund request for overpaid taxes for a three-year term, counted as from the time of payment or the final judgment in the matter.

Where a MAP is not successful in solving a matter, there is no compulsory arbitration in treaties entered into by Chile.

As a general rule, Chile has no obligation to reach an agreement, except in the case of Article 4 which refers to the double residency of individuals. Nevertheless, the contracting states must act in good faith in order to reach a solution, as stated in the Vienna Convention on the Law of Treaties.

Chile has also entered into several conventions to reciprocally promote and protect foreign investment, mainly with its commercial partners, following a free trade agreement. According to such foreign investment conventions, in the case of a dispute between the State of Chile and a foreign investor, the matter may be subject to international arbitration. In this regard, most of the treaties state that the dispute will be filed before the International Centre for Settlement of Investment Disputes (ICSID) based in Washington, DC in the USA, which functions under the World Bank.

Chile has a specific provision regulating APAs, contained in Article 41 E No 7 of the Income Tax Law, which expressly authorises the Chilean IRS to enter into APAs with taxpayers.

The Chilean APA programme allows taxpayers to agree with the Chilean IRS on the transfer pricing methodology and conditions applicable to future related-party transactions for a period of up to three years, with the possibility of renewal. The APA covers specific intercompany transactions and is binding on both the Chilean IRS and the taxpayer for the agreed period, subject to material changes in facts and circumstances.

This provision was amended in 2025, establishing a procedure to request an APA and introducing the possibility of submitting a consultation for entering into an APA. The taxpayer interested in proposing an APA may submit a preliminary enquiry to the Chilean IRS, which will analyse the enquiry and may request clarifications, if appropriate. The Chilean IRS will communicate the viability of the APA within two months following the date of submission of the request. In addition, the law established the possibility of rolling back an APA, giving it retroactive application.

Advance Rulings

Taxpayers have the possibility to request an advance ruling from the Chilean IRS to confirm a tax position or interpretation. This can be exercised in three ways:

General consultations on a no-name basis

This option is available to all taxpayers, whether they are personally and directly involved or whether they have economic interest in the transaction or not, allowing any taxpayer to request a ruling to interpret a tax law. Under this scenario, the answer provided by the tax authority will not be binding for the taxpayer. However, the Tax Code sets forth a provision in Article 26 which states that no retroactive collection applies when the taxpayer has applied, in good faith, a certain interpretation issued by the national or regional commissioners sustained in an official interpretation, which would include a specific ruling.

GAAR/SAAR consultation on a no-name basis

This option is also available for all taxpayers, whether they are personally and directly involved or have an economic interest in a transaction or not. This alternative allows any taxpayer to ask if a transaction or series of transactions may fall under the GAAR. As in the case above, the tax authority will also provide an answer to the consultation under a theoretical and general approach. In this scenario, the answer provided by the Chilean IRS will not be binding.

GAAR/SAAR specific consultation disclosing the name of the taxpayer and providing details of the transaction

Taxpayers may also request a ruling, providing all the relevant information of a transaction, if they are personally and directly involved in such transaction. In this case, the Chilean IRS will rule in a specific case with all the relevant information of the taxpayer on hand – thus, the answer provided will be binding, provided that the facts of the actual transaction are identical to those presented to be ruled on by the tax authority.

Collaborative Relationships

The Chilean IRS’s large taxpayer unit administers a new tax sustainability programme for large domestic and multinational taxpayers.

Under this programme, large taxpayers have access to dedicated account managers, and can obtain informal pre-clearance on significant transactions, as well as engage in periodic compliance review meetings with the Chilean IRS.

While the programme does not provide the same level of formal certainty as an APA or advance ruling, it facilitates a more transparent and predictable compliance environment.

Foreign Financial Institutions

It is possible to register foreign financial institutions (FFIs) before the tax authority, in order to secure a reduced tax rate applicable to interest payments made abroad.

Under domestic law, the WHT applicable to interest paid from Chile to countries abroad is 35%, while this tax is reduced to 4%, regardless of the application of a tax treaty, to interest arising from loans granted by a bank or a foreign or international financial institution, whether or not the financial institution in question is related to the taxpayer.

A voluntary registry of FFIs was created in 2008 in order to register these institutions, so that the Chilean debtor could have certainty that the tax to be withheld would be at the reduced 4% tax rate. Notwithstanding the above, those entities that meet the requirements to be deemed an FFI are entitled to the 4% reduced tax rate, even if they are not registered. However, once an FFI is registered before the tax authority, the latter is not able to challenge the 4% WHT, thus reducing the possibility of a dispute over the applicable tax rate.

Tax Invariability Regime

The bill of law recently sent to Congress proposes to create a new tax invariability regime applicable to foreign and domestic investors developing mining, industrial, forestry, energy, infrastructure, telecommunications, R&D, medical, or scientific projects, with a minimum investment amount of USD50 million.

Foreign investors entering into a foreign investment contract under this regime will be entitled to a total effective income tax burden at a rate of 35% for 25 years, counted from the commencement of operations of the respective company. The regime additionally provides for the maintenance of unchanged VAT and the customs tariff regime applicable to the importation of capital goods, throughout the period required to complete the agreed investment. It also contemplates the unchanged maintenance of rules on asset depreciation, loss carry-forwards, and organisation and start-up expenses.

For mining projects, the regime provides for special stability rights with respect to the mining royalty, new sector-specific taxes for mining activities, and amendments to exploitation and exploration concession fees.