Why is Chile the Leading Latin American Investment Destination?

Latin American economies have attracted more and more interest from foreign business in recent years. The reason for this interest is the fast evolving economies and varied and profitable national sectors. According to the Doing Business Study for 2018, Chile ranked 55th for the ease of doing business. In this same report formed by the World Bank, Chile ranks higher than any other Latin American country.

The longest country in the world, famous for its wide variety of natural phenomenons, offers numerous opportunities for businesses looking to expand the operations abroad. 

Chile is a Leading Investment Destination – Tourism

Why invest in Chilean business
 For the fourth time, Chile has been declared the best destination for adventure tourism in South America.

As Chile is home to a variety of tourist attractions, tourism has seen a huge rise in recent years. For the fourth time, Chile has been declared the best destination for adventure tourism in South America. This is according to the 25th World Travel Awards. Furthermore, Chile offers numerous options for sustainable tourism.

The government has been promoting and stimulating sustainable tourism over the last few years. For example, The National System for Distinction of Sustainable Tourism was created. The purpose of this entity is to certify and award sustainable tourism ventures. 

Governmental Policies Encouraging Foreign Investment

Other aspects that make Chile an attractive destination for foreign business is due to strategic governmental policies formed in recent years. Chilean president Piñera has implemented these policies to ensure that Chile remains an attractive destination for business expansion. The billionaire aims to push the Chilean economy to new heights in the coming years. Some examples of these policies include: 

  • Tax benefits towards large enterprises. Large companies are offered various fiscal benefits. 
  • Trade agreements. Chile has entered various regional trade agreements with large export and import partners, for example, the United States.
  • Legal entity structure – ‘Sociedad por Acciones’. This legal entity structure allows a single shareholder and allows for a quicker incorporation time.

Additionally, Chile has one of the most stable political environments in the whole of Latin America. The nation has low rates of corruption and the Chilean media has independence from the government.

Foreign Investment Law in Chile

This law regulates investments made by any natural or legal person incorporated overseas, so long as the investment is equal or greater than USD5 million (or the equivalent in other currencies). These regulations contain a couple of benefits:

  • Overseas Repatriation. It allows for the repatriation of net profits once the applicable tax obligations have been fulfilled. 
  • Exemption from Value Added Tax (VAT). Companies are exempt from this tax when importing capital assets. 
  • Equal Treatment. Foreign investors and owners have the right to not be arbitrarily discriminated against. This secures that foreign individuals and companies have the same rights as Chilean persons. 
Why invest in Chile
In addition to having governmental policies welcoming of foreign investment, Chile has a program specifically for startups.

Start-Up Chile

In addition to having governmental policies welcoming of foreign investment, Chile has a program specifically to encourage startups. This program is called Start-Up Chile and is the leading accelerator in Latin America. It has a couple of huge benefits for new businesses starting in the country. A couple of these benefits are:

  • Funding. Start-ups can receive funding of up to CLP$25M Chilean pesos. 
  • Accelerations. The program provides companies with access to investor mentors and international and national corporate networks. 
  • Working visa. Along with access to a free co-working space, foreign teams can receive a one-year working visa.

However, not every startup will be eligible for the Start-Up Chile program. It requires businesses to send in business plans, and from there, the program chooses the startups it will fund each year. Nevertheless, the program has resulted in a rise in startups in Chile. 

Chilean Mining Sector 

Why invest in Chile
Approximately 55% of Chilean exports are related to this sector; the sector currently represents about 6% of tax revenues.

Mining is still the largest sector in the country and it is dependent on a couple of factors for its success. Between the years 1974 and 2012, there have been around USD$30 billion of foreign investment in the mining sector. Accordingly, approximately 55% of Chilean exports are related to this sector; the sector currently represents about 6% of tax revenues.

With the mining reserves believed to be existing for at least another century, the industry will play a key role in the future economic growth of Chile. Furthermore, investors have unlimited access to foreign exchange markets and are eligible for certain benefits in the case of large-scale investments. These benefits provide a prosperous and potentially beneficial market for mining companies. 

We can help you with doing business in Chile!

To conclude, Chile did not earn its place on the ‘Doing Business Study for 2018’ due to luck. Governmental policies and laws have secured profitability and stability for a variety of national sectors. Moreover, it provides opportunities for new start-ups by aiding them with financial benefits and corporate support. 

To learn more about the Chilean economy, the business opportunities to form a company in Chile, and how you might take advantage of these political shifts, please contact us today.

Are you interested in incorporating a company in Chile but are not sure of the first steps to get started? Check out our video below for more information… 

Why Incorporate a Company in Chile?

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