Advisory Insights

Closing a business in Chile goes far beyond simply shutting the doors. There is a formal tax procedure called término de giro that quietly trips up thousands of entrepreneurs each year. If you handle it correctly, your business closes cleanly. If not, you may face challenges from the tax authority years after you thought your business was finished. Here’s what most guides overlook. What Is a Término de Giro, Exactly? Término de giro is the formal notice you submit to Chile’s

Previously, we discussed the critical role of the local legal representative for businesses operating in Chile and highlighted how some back-office providers offer inadequate solutions. These range from appointing foreigners residing outside of Chile who then delegate locally, to designating local employees who lack the necessary expertise, seniority, and experience to effectively represent the company before clients, providers, and public institutions. Diligent clients shoul

Understanding Chile’s Two-Month VAT Deferral: Why It Matters for All Companies, Regardless of Credit Sales VAT in Chile works on an accrual basis: the moment a company issues an invoice, the 19% IVA becomes a tax liability, regardless of whether the client has paid yet. For businesses that sell on credit terms of 30, 60, or 90 days, this creates a predictable cash flow problem. The tax authority does not wait for your client to pay; the SII expects the VAT to be settled by th

Before issuing its first invoice or any official tax document in Chile, a company must complete a mandatory registration with the Servicio de Impuestos Internos (SII), Chile’s internal tax authority. This registration, known as the Inicio de Actividades, legally activates the company’s taxpayer status and authorizes it to issue electronic tax documents. This guide outlines the complete process, from forming a legal entity to completing the activity verification that unlocks f

When a foreign company decides to begin operations in Chile, one of the first decisions it must make is how it will engage the individuals who will carry out its activities. Beyond establishing the corporate entity, tax, or regulatory matters, properly defining the type of relationship with those who will provide services is essential to ensure an orderly start and to avoid future labor contingencies. In practice, it is common for companies new to the Chilean market to seek

A plain-language guide to facturas, boletas, and every document in between If you have conducted business in Chile, whether as a buyer, seller, freelancer, or company owner, you have likely encountered a range of official documents that support each transaction. These are known as Documentos Tributarios (tax documents), and they are mandatory: the Servicio de Impuestos Internos (SII), Chile’s tax authority, requires the appropriate document for every sale, service, or deliver

What changed, and who's still exempt If you operate a business in Chile, hire freelancers, or engage professional services such as consulting, legal, or design work, you may have noticed that invoices that were previously tax-free now include an additional 19%. This change is not an error, it is the result of a significant, yet understated, modification to Chilean tax law in recent years. This article explains the reasons behind these changes, outlines what has occurred, and

Dissolution and liquidation are distinct processes, and it is essential to understand their differences and legal origins, as they play a fundamental role in the life cycle of commercial companies in Chile. Most companies in Chile are incorporated as “Sociedades,” enabling them to carry out their objectives within the relevant legal framework. This structure ensures that a company’s interactions with its environment, stakeholders, clients, suppliers, competitors, and governme

Chile was one of the first countries in Latin America to implement electronic invoicing on a large scale. Today, every business-to-business transaction is digitally tracked through the SII (Servicio de Impuestos Internos, the Chilean tax authority). This guide provides a clear explanation of how the system works, and no accounting degree required. 1. What is a DTE and how does it work? The official term for a digital tax document in Chile is DTE (Documento Tributario Electrón

Let us begin with a widely recognized premise: The banking system in Chile presents significant challenges, with numerous hurdles and unexpected complications for foreign companies seeking to enter any industry or sector. Opening local bank accounts for companies owned by international individuals or entities is neither straightforward nor swift. Whether due to commercial risk mitigation, stringent compliance requirements, or a combination of both, banks impose considerable o

In a dynamic, internationally oriented economy, it is common for local companies to engage in commercial transactions with foreign third parties. Commercial relationships with clients, providers, related entities, and international organizations will occur constantly, and thus there is an imperative need to anticipate and address any and all taxation risks that may arise. It is no surprise that Chile is an extremely open country when it comes to Trade and Commerce; specific

A friendly guide to what it is, who it affects, and how to stay on the right side of it If your business pays for Netflix, Spotify, Google Ads, Microsoft 365, AWS, or even an OpenAI subscription, this guide is for you. Chile has a tax that applies to almost all of these digital tools and understanding it doesn't have to be complicated. Here's everything you need to know, explained in plain language. So, What Exactly Is Digital VAT? Back in 2020, Chile introduced a tax rule th

You purchased a machine for your business, an important investment. However, you may be wondering whether you can deduct the entire cost immediately. This article provides a clear, jargon-free overview of depreciation in Chile and what it means for your business. In This Article What is depreciation, really? How it works for taxes in Chile How it works in financial statements (IFRS) The key difference between the two Why depreciation is actually a big deal Common mistakes to

Chile's accounting landscape changed forever, but most businesses are still operating like it's 2005. Here's a no-nonsense breakdown of what's going on, and where the painful, avoidable errors keep happening. The system has two personalities, and most people only manage one. In Chile, accounting has two distinct dimensions that must coexist: tax accounting, governed by the requirements of the Servicio de Impuestos Internos (SII), and financial accounting, also known as genera

What the Tax Authorities automatically assign when you register your company may not be right for your actual situation. When an entrepreneur decides to formalize their business and incorporate a company in Chile, the process can seem straightforward at first glance. Yet behind the forms and filings handled through the Internal Revenue Service known in Chile as the Servicio de Impuestos Internos (Tax Authorities) lies a decision of enormous consequence that many business ow

Corporate Secretarial Services Back-Office providers frequently get this so wrong: They target existing clients for cross-selling services they neither fully comprehend nor are adequately equipped to deliver. A similar scenario arises with new clients: In an effort to increase revenue, Back-Office Providers often offer a broad array of ancillary services without clearly distinguishing which are mandatory and which are ad hoc or tailored to specific client or sector requiremen

Every single company based and operating in Chile needs to have a registered fiscal address with local Tax Authorities; it is that simple. We have seen over the years how other Back-Office Providers offer “solutions” that are far from ideal: Engaging third parties to provide the service: In this scenario, the local Back-Office Provider will use and sell to the international client not its own address, where its offices are physically situated, but that of a third local party

Legal Representation Know – How for Chile No Lead or Introductory Paragraph needed, let´s just cut right to it: All foreign companies looking to operate and do business in Chile need to have a legal representative, regardless of whether they choose to buy a Shelf Company, open a Branch, or incorporate a Subsidiary. We have seen over the years how some local back-office providers come up with bizarre and inadequate ways to provide this service: From appointing foreigners based

The process of opening companies in Chile involves not only business and tax decisions but also a proper understanding of the Chilean labor framework and the key labor aspects, which is characterized by a high level of regulation, oversight, and increasing regulatory sophistication. For those considering starting operations in the country, anticipating the main labor risks and obligations is essential to avoid contingencies, optimize costs, and ensure an orderly implementatio

Key things to consider: There is no need to transfer the initially stated social capital. There is no need to register the Company in any “Public Investor Registry.” There are essentially (3) basic ways to fund a Subsidiary Company in Chile: #1 Loan Agreement #2 Cost-Plus Service Structure #3 Capital Increases #1: Loan Agreement Recommended for those cases where the local subsidiary company will generate and declare revenue and profits in the country. In other words, a loan