Chile: Requirements for reduced withholding tax rate for foreign insurance companies, recent VAT developments
Reduced withholding tax rate for foreign insurance companies and recent VAT developments
Reduced withholding tax rate for foreign insurance companies and recent VAT developments
To access the reduced withholding tax rate of 4%, foreign insurance companies must be registered with a regulatory authority of a country or market, but they are not required to have a representative or agent constituted in Chile who is responsible for compliance with the company’s tax compliance obligations.
Background
Article 59 of the income tax law contemplates certain cases when withholding tax rates other than the general rate of 35% are applied. A reduced rate of 4% is applied in the case of interest paid or credited to an account for credits granted from abroad by foreign or international banking or financial institutions, as well as by insurance companies and foreign pension funds. Because the withholding tax must be withheld and deposited in fiscal coffers by the paying agent in the country, the requirement to have a representative or agent constituted in Chile who is responsible for tax compliance obligations is not applicable to foreign insurance companies.
VAT developments
In addition, recent value added tax (VAT) developments concern:
- New codes for form 29 for monthly declarations and simultaneous payments of VAT withheld
- Obligation of free zone users to operate with the register of purchases and sales
- VAT on the sale of rural parcels from a subdivision
- VAT applicable to health services and services provided by educational establishments, as of 1 January 2023
Read an August 2022 report (Spanish and English) [PDF 201 KB] prepared by the KPMG member firm in Chile
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.