Chile offers many opportunities for business from its attractive mining industry to its growing startup environment. The Chilean business environment is also attractive to foreign investors. It has an economy with positive growth perspectives, a business-friendly president and well developed financial markets. However, to do business in Chile, one must be aware of the local business/company accounting and taxation requirements.
Keep reading and ensure you stay compliant with the Chilean authorities!
Principal Administrative Formalities Before Starting Commercial Operations?
- Every individual and company needs to obtain a tax ID number (R.U.T.) to be able to operate business activities. This taxpayer number is granted when the individual or company is registered by the Internal Revenue Service.
- A declaration of the initiation of activities must be made to the Internal Revenue Service within 2 months after initiation of operations.
- A commercial license from the Municipality must be obtained.
- In some cases, companies need special permits which depend on the sector and nature of its activities. Examples of these permits are health permits (SNS), environmental permits (SESMA), foresting permits (CONAF), agricultural and livestock permits (SAG), mining permits (SERNAGEOMIN), marine permits (DMM), air navigation permits (DGAC), telecommunications permits (MTT) and others.
Bookkeeping Requirements in Chile?
An entity’s financial year cannot be longer than twelve months and its end day may be freely chosen by the shareholders. Nevertheless, regarding tax purposes, the December 31 year-end must be used. The Internal Revenue Service can authorize the use of a June 30 year-end, however, this not common. In general, all entities and taxpayers are obligated to maintain complete its accounting records. These accounting records include a cashbook, a journal, a ledger and a balance sheet register, or their equivalents. Furthermore, the following records must also be kept for tax purposes:
- Sales and purchase journals
- Payroll register (only with 5 or more employees)
- Tax withholding register
- Inventory register
- Taxable profits ledger (FUT)
Since 2014, Chile has fully adopted the accounting standards of IFRS. Furthermore, in recent years, changes in the tax code have simplified it to keep accounting records in foreign currency when certain requirements are met. In addition, rules for paying taxes in foreign currency have also loosened.
Despite these simplified process, it is highly rrecommendedto work with a local partner to ensure you comply with all legal and fiscal requirements when operating in Chile.
Public Availability of Financial Statements
In Chile, certain types of companies are obligated to file quarterly and annual financial statements with the corresponding regulatory agency (Superintendency). These financial statements are then made publicly available. The principal types of companies who fall under this rule are banks, financial institutions, insurance companies, pension plans and publicly traded companies. Most other legal entities are not required to file financial statements with any government agency.
Need More Information Regarding the Accounting and Taxation Requirements in Chile?
While simplified processes have made understanding and adhering to accounting and taxation obligations in Chile much easier when doing business, many foreign companies run into trouble when trying to comply with the local regulation.
At Biz Latin Hub, we have a team of professionals who can help you with all your accounting and taxation needs so you can focus on developing your business in Chile. Reach out Country Manager Allan at here to see how we can support you and your business in Chile and Latin America.
Watch this video to learn more about our accounting and taxation services: