Country Rankings - Chile
Mar 21, 2018 Chile: reform-mindedBut sometimes, it is the case that when one political party has a particularly convincing win at the polls they set about dismantling the predecessor administration's policies almost the minute they obtain the keys to the presidential palace. Hence, in some countries, tax laws are in a virtually constant state of flux. In Chile, for example, the new center-right Government has replaced former President Michelle Bachelet's corporate tax reforms with tax reforms of their own. And the Bachelet reforms were only fully implemented in 2017 — although most companies would probably agree that there is much room for improvement in Chile's corporate tax regime after Bachelet's complex changes. Rapid shifts in the political power base are one thing. Indecisive election results are quite another. And such outcomes can lead to the perception that change is coming when all the time it feels just out of reach. Just look at how taxpayers in Germany were left on tenterhooks for almost six months until a new coalition government could be formed. And after all the excitement about the Free Democrat Party's demands for radical tax cuts, taxpayers were soon brought down to earth by a new Grand Coalition to be led by "Mutti" — Angela Merkel — the ultimate deficit hawk. Having said all of this, has anyone noticed how unelected bodies are having a growing influence on domestic and international tax policies lately? Certainly, the International Monetary Fund likes to have its say on taxation in its country Article IV reviews. But it hasn't got much teeth, unless it's lending you money, that is. The OECD, on the other hand, has, and in the last two or three years, it has helped to change the face of international taxation.
Aug 17, 2015 Chile: wrongI like Chile. It's one of those pleasingly unconventional countries. For a start, it must be the most bizarrely shaped nation on the world atlas. Resembling a fully uncoiled snake, it spans almost 2,500km of South America's Pacific coastline, yet is only 170km wide on average. But Chile is far more than just a strip of dry desert wedged between the Andes and the ocean. While countries like Brazil and Colombia bathe in the limelight with their membership of the BRICS and CIVETS clubs of top emerging economies, Chile has quietly got on with the business of growing its trade and economy. The country has been fully democratic for over 20 years, and sound economic and fiscal policies have given it the highest sovereign debt rating in the region. Chile has 22 trade agreements covering 60 countries, and exports now account for one-third of GDP. It also sits at the Trans-Pacific Partnership negotiating table with the US and other key Pacific Rim economies. And I bet you didn't know that Chile was the first South American nation to join the OECD, the club of rich nations? (You can keep your BRICS and CIVETS, Brazil and Colombia!). However, as you might have guessed, having built Chile up, I'm going to give it a little reality check. While most countries have cut corporate taxes over the last decade or so, Chile is going to raise corporate tax. The rationale behind the move is a noble one: President Michelle Bachelet wants to reduce inequality and improve access to education and health care. However, perhaps this isn't the right way to go about it. Chile has already been criticized by the IMF, of all institutions, for confusing companies with its tax reform plans. And like two magnets set to the same polarity, investors tend to be repelled from legislative confusion. The tax reforms are intended to raise additional revenue equivalent to 3 percent of the economy – that's a fair whack of money. I read recently that Chile has more than USD20bn stashed in a sovereign wealth fund, equal to about 5 percent of GDP. Maybe it's time to raid the piggy bank, instead of taxpayers.
Jul 31, 2014 Chile: against the grainThe Chilean Government's plan to invest heavily in education, part of its wider strategy to reduce income inequality, is a laudable one. However, the plan isn't without its risks: much of the money will come from a hike in corporate tax from 20 percent to 27 percent, recently endorsed by Chile's Senate, which is a pretty hefty increase when you consider that the global corporate tax trend has been firmly downward over the last few years, hardly reversing even when the financial and economic crisis struck. It remains to be seen how foreign investors react to the move, but it is probably safe to say that stakeholders in the Chilean economy are hardly jumping for joy at the prospect of a 7 percent income tax increase. Since the dictator General Pinochet was ousted, Chile has actually become one of the region's economic success stories: growth averaged 5 perent a year between 2003 and 2013, and GDP per capita, at USD19,000, is not far behind some EU countries like Greece and Portugal. Its sovereign bond rating is also the strongest in South America. So you could say that there is quite a lot to lose if the Government's policies go wrong. Even though she leads a left-wing coalition including the Communist party, Chilean President Michelle Bachelet is also a pragmatist, noting recently that without growth, there will be no fall in inequality. If that's the case, maybe she should revisit the tax reform plan.
Sep 05, 2013 Chile: being PacificPace Mr Lamy, it has been a good week for trade, in fact. Chile, Peru, Colombia and Mexico, constituting the "Pacific Alliance," have committed themselves to a tariff-free zone, probably coming into force in 2014, which will later be joined by Costa Rica and Panama. Separately, Canada and Turkey agreed to set up a joint economic and trade committee as part of a broader agenda for strengthening their trade and investment relationship, and mapped out an ambitious and comprehensive free trade agreement. And in Brunei, the trade ministers of the countries negotiating the extended Trans-Pacific Partnership (TPP) – Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the United States – reaffirmed their commitment to conclude the treaty by the end of this year. A joint statement said that: "particular areas of focus have included matters related to market access for goods, services/investment, financial services, and government procurement as well as the texts covering intellectual property, competition, and environmental issues." The meeting marked the start of the 19th round of negotiations, and the first one in which Japan has full participation.
Aug 23, 2012 Chile: wants an FTA with whom??Chile is bravely setting out to negotiate an FTA with the sub-continent. Best of British luck is all I can say. Actually Chile is South America's Canada in this respect. Free enterprise and free trade seem to be in its DNA. Why is it that some countries have all the right instincts while others get everything wrong? Not going to try to answer that question right here and now; more than 500 words on any one subject and the editor starts to twitch. When I retire I'll write a book about it.