Doing business in Chile

This guide has been prepared by Albagli Zaliasnik with the objective of providing our domestic and foreign clients – as well as the law firms worldwide that may need assistance for their clients – with a precise tool that summarises the essential aspects for the formation and development of commercial activities in Chile.

This document contains references to Chilean legislation in matters related to foreign capital investment, company formation and the main regulatory frameworks for commercial activity, to provide an overview of our legal, commercial, tax, labour, and customs system, as well as the integration of various institutions enshrined in Chilean law.

This short manual is a reference framework to understand the legal norms to carry out business activities in our country. We are at the disposal of our clients and interested parties to support them in everything they deem necessary.

Foreign investment

By director of corporate and compliance group Eduardo Anguita and associate Catalina Coddou

Chile is the most economically stable country within South America and, according to The World Bank, a ‘high-income economy’. Chile also has the highest economic freedom score in South America (nineteenth worldwide) according to the 2021 Index of Economic Freedom. This score reflects its openness to global trade and investment, and its transparent regulatory environment as well as strong rule of law, which continue to provide a solid basis for economic dynamism.

Highlights of foreign investment regulation

  1. Chapter XIV of the regulations of the Central Bank of Chile applies to any amount over $10,000 brought into Chile. It establishes the freedom of exchange principle. This is the freedom to remit funds into Chile and out of Chile, whether as capital, credits, deposits, or other obligations. Investors under these circumstances must report to the Central Bank, to enter funds through the formal exchange market (ie, local banks and authorised exchanges), and remittance of funds must be made through this formal exchange market.
  2. InvestChile, a governmental authority in charge of any direct foreign investment over $5m.
    InvestChile will certify any transfer from abroad from a foreign investor to Chile as capital or credit. This grants the investors the right to:

•  Transfer abroad the invested capital.
•  Transfer abroad profits once they have paid all taxes.
•  Access to the formal exchange market.
•  Not be discriminated against.

Transfers in any case must comply with general rules and must be made through the formal exchange market, usually through local banks.

Legal frameworks for operating in Chile

By tax group director David Ancelovici

There are a variety of ways non-residents can directly invest in Chile. The general rule is that there are no limitations for non-residents to do business in Chile or to invest in local companies. Domestic legislation offers several types of companies, which could eventually accommodate different shareholder profiles. However, considering its flexibility, a limited liability stock company (Sociedad por Acciones) is usually the company of choice. However, this will clearly depend on investor preferences and the type of business intended.

Additionally, foreigners not only invest through commonly known legal entities, but also through representatives, agencies, and/or types of legal contracts. For instance, investments may be structured though joint ventures, permanent establishments, private equity and investment funds, distribution agreements, franchise agreements, among others. The way investments are handled will depend on how the investor intends to manage and administrate their funds in Chile and, especially, what are the corporate and tax implications concerning each one.

Tax regulation

By tax group director David Ancelovici

As a rule, individuals who are residents and/or domiciled in Chile are subject to unlimited tax liability on their worldwide income, based on a progressive tax rate which varies from 0% to 40% (Complementary Global Income Tax). Companies on the other hand are subject to a 27% Corporate Tax, acquiring residence upon incorporation. Non-residents are subject to limited tax liability regarding Chilean source income, whose withholding tax rate may vary depending on the type of income being paid and/or distributed abroad, generally set at 35%.

The Chilean tax system is partially integrated, meaning foreign shareholders – upon remittance – can credit 65% of corporate taxes paid against their withholding tax. Exceptionally, corporate tax paid in Chile may be fully credited against withholding taxes, provided there is a Double Tax Treaty in force. Further, provided certain requirements are met, non-residents who dispose – either directly or indirectly – of Chilean shares or participation rights are subject to tax in Chile.

Finally, there is a flat VAT rate of 19%, applicable to the sale of movable and immovable property, the majority of services, imports, and digital services. Exemptions apply.

Labour and employment regulation

By partner Jorge Arredondo

Employment contracts

An employment contract is the basic instrument for the regulation of labour activity in Chile and is the basis for all labour and social security regulations. In turn, within individual employment contracts, we can distinguish three sub-classes of contracts:

  • Employment contracts for work or service.
  • Fixed-term work contracts.
  • Indefinite-term work contracts.

Social security system

The rules on social security and health contributions are applied in parallel with all employment contracts. Failure to comply with the obligation to withhold, declare and pay the contributions entails a fine by the tax authorities.

Health insurance system

As in the case of social security contributions, Chilean regulations impose on employees the obligation to make health insurance contributions during the term of an employment contract. Specifically, this is 7% of the gross salary, which is paid to a Social Security Health Insurance Institution (ISAPRE) or to the National Health Fund (FONASA).

Intellectual property

By partner Eugenio Gormáz

The protection of intangible assets is critical when starting a new business or giving due protection to an already established business. With the constant evolution in the digital era, technological tools are now imperative when defining a successful business, so the service provided must be analysed as a whole, including the traditional edges of industrial and intellectual property, along with other types of rights, such as the protection of personal data, consumer law and advertising law. All these areas of protection are available here in Chile. Thus, the new reality makes it necessary to constantly evaluate all these regulatory compliance parameters.

Additionally, we must consider the constant advances at a national level. For example, Chile just approved the motion that the country will be joining the international Madrid Protocol, of which they were not previously members and there is also a bill in process that will increase the standards of regulation for protection and processing of personal data.


By associate Álvaro Glisser

Immigration to Chile has become a relevant issue in recent years, as many national or foreign companies with headquarters in the country have opted to bring qualified foreign professionals into the country for various jobs. Having a valid visa allows the interested party to obtain a national identity card, allows the interested party to become involved as an employee under the same conditions as a Chilean national, with respect to banking, social security, tax, and health matters in accordance with the law.

In Chile there are several types of visas for which foreigners may apply and several ways to obtain them. The most usual, simple, and expeditious way – considering the recent collapse of the system – is the processing of a visa subject to an employment contract through consular channels, whose background information is entered online on the Chilean immigration website, culminating the process in the respective consulate with the stamping in their passport. The visa, subject to work contract, has a duration of two years and will enable the interested party to opt for permanent residence. Another usual procedure can be framed within the Temporary Residence Permit for businesspeople, investors, or traders, which is processed physically in our country and has a duration of one year.

International trade agreements

By tax group director David Ancelovici

International trade agreements

From a commercial perspective, Chile has adhered and ratified 26 free trade agreements with over 50 countries, being one of the jurisdictions in Latin America with most access to world economy, including countries such as China, United States, and the EU.

Additionally, Chile is a founding member of the Pacific Alliance, whose objective is to develop its trade relations with other jurisdictions in the region, each of which has a coastline with the Pacific Ocean. The Pacific Alliance is increasingly trying to form new agreements with other countries, particularly New Zealand and Australia (currently under negotiations). The other members of this agreement are Colombia, Peru, and Mexico.

Further, Chile currently has the largest tax treaty network in Latin America, having 33 enforceable double tax conventions and five additional treaties which have been signed and currently awaiting promulgation. In accordance with Action 15 of the OECD BEPS Action Plan, Chile signed and ratified the MLI, which was published and came into force on 12 March 2021.