If you are active in the Chilean market or interested in registering a business in Chile, you will need to find a reliable corporate accounting firm to assist you. Because, as well as guaranteeing your compliance with all local regulations and norms, a good accounting firm in Chile will be able to help you identify opportunities to manage your taxes and financial affairs in order to maximize your profitability.
Ranked as the fifth-largest economy in Latin America, Chile is known for being a business friendly economy, registering a gross domestic product (GDP) of $282.3 billion in 2019 (all figures in USD).
Chile is one of the most prosperous countries in Latin America and the Caribbean, with gross national income (GNI) reaching $15,010 per capita in 2019 — a figure that places it as a high-income nation by standards established by the World Bank.
In keeping with its pro-business outlook, Chile is also a free trade beacon, with an extensive network of free trade agreements (FTAs) in place providing locally-based businesses with preferential access to key markets around the world.
It is also a founding member of the Pacific Alliance — a 10-year-old economic integration initiative that also includes Colombia, Mexico, and Peru, and which has ambitions to expand beyond the region.
All of these factors add up to make Chile a popular destination for foreign direct investment (FDI), with FDI inflows reaching $11.93 billion in 2019.
If you are planning to register a business in this highly-developed economy, read on to understand some of the accounting requirements your accounting firm in Chile will be able to assist you with.
Or go ahead and contact us now to discuss your business options.
Accounting in Chile
In Chile, the tax year starts on the 1st of January and ends on 31st of December in the same year. Accounting standards are based onInternational Financial Reporting Standards (IFRS), with the laws related to accounting and tax compliance found in the country’s Tax Code and Commercial Code. All reporting is made to the Chilean Ministry of Finance.
Your basic financial statements will include statements of the likes of financial position, comprehensive income, cash flows, and changes in shareholder equity. Meanwhile, your annual income tax declaration will be composed of several sworn affidavits, which need to be filed between March and June of each year.
In 2020, Chile approved a tax reform process, which affects certain aspects of the tax declaration and accounting process. As such, if you have previous experience in the market, but have not operated there recently, you may need to update your processes to meet those new standards. This is something your accounting firm in Chile will be able to assist you with.
Matters your chosen firm will help with
Among some of the most important matters that your accounting firm in Chile will be able to assist you with are the following:
Income Tax: While income tax is based on the income your business generates, it also factors in salaries, outgoings, and a range of other concerns. The income tax burden of an individual company are based on which taxation category it falls into, with five categories in existence, based on the size and type of business you are running.
Value-added tax (VAT): The VAT rate in Chile is generally set at 19% of the price of the goods or services. However, for certain products, including the likes of alcohol, tobacco, and luxury items, an additional sales tax can apply, ranging from 10% to 50%. Gasoline is also subject to specific taxes. Meanwhile, exported goods and services are subject to zero VAT.
VAT returns should be filed on a monthly basis — something your accounting firm in Chile will be able to assist you with.
Employee contributions: If your business involves hiring local staff, you will be liable for a range of contributions that your accounting firm in Chile can oversee, with the overall burden falling upon you generally being approximately 20% of an individual employee’s salary.
That will be made up of the likes of:
- Health contributions
- Unemployment insurance
- Occupational health and accident insurance
- Pension fund contributions
Biz Latin Hub can be your corporate accounting firm in Chile
At Biz Latin Hub, our multilingual team of Accounting & Taxation specialists is equipped to help you meet all of your financial obligations in Chile. With our full suite of corporate support and back-office solutions, including, legal services, company formation, and recruitment, we can be your single point of contact to support your market entry and ongoing operations in the Chilean market, or any of the other 17 jurisdictions around Latin America and the Caribbean where we have teams in place.
Reach out to us now for a consultation or free quote.
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