Chile

Reporting on investments in Chile and abroad

Chilean foreign investment

Taxpayers must file an annual affidavit informing all the investments performed during the previous year, pointing out the amount, kind of investment, country, purpose, and any other additional information the Chilean IRS may require.

Low-tax jurisdictions

Law No. 21,713 modified the requirements to qualify as a low-jurisdiction or preferential tax regime. In this sense, a jurisdiction will be deemed to have a preferential tax regime if it meets the following cumulative requirements:

• It has not entered into an agreement with Chile allowing for the exchange of information, or if such an agreement has not entered into force, or, if in force, contains limitations that prevent effective exchange of information; and
• It does not meet the conditions to be considered compliant or substantially compliant in matters of transparency or exchange of information for tax purposes.

Finally, the reference to the non-application of this article to OECD member countries is removed.

Foreign Account Tax Compliance Act (FATCA) agreement

On 5 March 2014, Chile entered into a bilateral intergovernmental agreement (IGA) with the United States (US) in order to comply with FATCA.

Chile signed a Model 2 IGA, which is a non-reciprocal exchange of information agreement. The execution of this agreement will imply that Chilean financial institutions with US account holders, in order to avoid paying the 30% rate WHT that FATCA establishes, will have to register with the US Treasury and US IRS and sign a Foreign Financial Institutions Agreement with them in order to be FATCA compliant.

In this context, each Chilean financial institution that enters into these agreements with the US tax authorities will be required to report to the US IRS directly the individual US account holder’s information.

In accordance with the Chilean Bank Secrecy Law, Chilean financial institutions, in respect to those account holders that do not authorise them to disclose their account information to the US IRS, will only be able to disclose their information in aggregate. This will mean that the US IRS, in order to obtain the specific information of those US account holders, will need to request it directly from the Chilean IRS, under the terms of the treaty between both countries.

Bank secrecy

Law No. 21,713 of 2024 modified the provisions regarding bank secrecy. Now there are two different procedures for lifting the banking secrecy: (i) a general procedure, subject to judicial oversight, similar to the one currently in place but with shorter timeframes and greater protections for the taxpayer; and (ii) an exceptional procedure for qualified cases that would be more aligned with the lifting of banking secrecy as outlined in the Economic Intelligence Bill.

Each procedure has specific cases where can apply and different requirements and deadlines.

Taxation applicable to funds

Public investment funds, private investment funds, and mutual funds are not considered as FCT payers, but their managing entities need to keep a number of registries in order to determine the taxation applicable to their quota holders regarding the amounts distributed by the fund.

Taxation of funds is similar to taxation of shares of a stock corporation. In this sense, dividends distribution would be treated as a distribution from a stock corporation subject to PIS. In case of capital gains, it would be considered as an alienation of shares of a stock corporation, in this sense, alienation could be tax exempted if funds are regularly traded or 90% or more of their portfolio is invested in regularly traded securities.

Please bear in mind that quota holders that are not domiciled or resident in Chile are just subject to a sole tax rated 10% or tax exempted in case they invest in public investments funds that have 80% of their assets located abroad.

Duty of information and start-up activities

Law No. 21,713 of 2024, as part of measures against tax evasion, included modifications to the duties of information disclosure and adds the obligation for various public and private entities to require a declaration of start-up of activities from their users.

• The statute of limitations is extended by twelve months if the omission of the reporting duties regulated by Article 68 is detected, in cases where the non-compliance is intended to avoid tax payment, conceal the taxpayer, or avoid the application of a special or general anti-avoidance rule
• The obligation is introduced for banking and financial entities to provide information to the Internal Revenue Service (SII) when the account holder has verified that, within a single day, week, or month, more than 50 credits have been made from 50 or more different individuals or entities, or that within a six-month period, at least 100 credits from 100 different individuals or entities have been made. All of the account holder's accounts must be considered for counting the credits, and this information may serve as the basis for an audit process.