Chile company registration
Healy Consultants Group PLC
04 June, 2014
In recent years, more global entrepreneurs have shifted from China to South America. Chile is one of the countries that attract a large amount of foreign investments because of its rising economy and the flexible business law. Chile company registration offers many benefits.
Firstly, an LLC in Chile can be setup within 6 weeks with a minimum paid up share capital of only US$1. Only two shareholders are required for the company incorporation, who can be of any nationality. Foreign entrepreneurs can incorporate in all sectors of the economy except hydrocarbons. Secondly, Chile is an excellent place to setup a manufacturing and distribution company because it has the best infrastructure in Latin America. The country's high quality roads, bridges, railways, air and sea-ports ease the transfer of goods. Moreover, Chilean free zones offer corporate tax exemption and import duty exemption for resident companies. Business operation costs in Chile are relatively low where average monthly warehouse rental costs are US$0.5 per sq.ft, average wage is approximately US$764.
Most importantly, a Chile company enjoys multiple Government incentives. For instance, Chile has Latin Americas 2nd lowest corporate tax rate (20%), which makes the country more attractive than other developing countries like Brazil (34%) and Argentina (35%). All exports from Chile are also exempt from custom duties and VAT. Furthermore, a Chilean holding company is 100% tax exempt if i) it is listed on the Chile stock exchange ii) it is not domiciled in Chile iii) shareholders and directors are not Chile residents and iv) the companys purpose is making investments in other countries.
Before entering the Chilean market, there are several compliance regulations that should be taken into account:
1. Every company must lodge an annual return confirming relevant details of the company for the public register including names and addresses of all directors, address of principal place of business and details of shareholders and their shareholdings;
2. Chilean companies must obtain a Tax Identification Number (RUT) and register for VAT prior to starting business;
3. There are four major taxes in Chile i) corporate and personal income taxes ii) Value-Added Tax iii) customs duties and iv) stamp tax. Collecting information, completing tax return forms and preparing separate tax accounting books in some cases might be a challenging task;
4. A company secretary is not required when forming a company in Chile;
5. When starting a business in Chile, it is important to anticipate what registrations and licenses are required. this is a complex area as the type of permits or special licenses vary depending on the nature of the activity and include health, environmental and municipal permits;
6. After incorporation, entrepreneurs should prepare a business start-up document and submit it to the National Tax Service;
7. Every Chilean company must obtain a working license from the municipality where they operate (for each of the enterprise's establishments, offices, ware-house). The license fee is paid once a year for a 12-month period, from July 1st to June 30th. The fee ranges from 0.25% to 0.5% of the company's share capital;
8. To comply with Chilean Law, all employees in the country must register to a professional accident insurance controlled by public authorities;
Chile is ranked as the 7th freest economy in the world according to the "2013 Index of Economic Freedom" and is the least corrupt country in the Latin America. Therefore, foreign companies can utilize the Chilean legal system to resolve business disputes.
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