Chile Tax
Chile Tax
Chile Tax
Uruguay
Spain
Others 1%
France 1% Others
Mexico 11 4%
11.4% Venezuela
2% USA 7%
2% 1%
26% Cayman
Netherlands Islands
2% 2% Argentina
Italy
Panama 30%
3%
Japan 1%
3% USA
Australia 7%
5%
Spain Colombia
19% 13%
UK
Canada Peru Brazil
9%
17% 17% 20%
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Trade policy elements
Open economy
Small country
Transparent
4
Options
Multilateralism
Plurilateralism or regionalism
Bilateralism
“All of them”
5
Stock-Foreign Direct investment/BNP
2008
%
Brazilil 19
9
Chile 60
China 9
Check Republic 53
Ireland 64
Mexico 27
South Africa 43
Spain 16
United States 35
World average 25
S
Source: UNCTAD (www.unctad.org)
( t d )
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Chile´s future....
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FTA and Taxation
8
Chile has used different ways to deal with
barriers of double taxation …
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Tax treaty negotiations
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Economic relations with the United States
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Basics of a Tax Treaty
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Some issues in the treaty
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Persons covered by the Treaty
- Concept of Resident
- Subject
S bj t tot tax
t
- Citizen´s taxation in US tax treaties
- Double residency – consequences
- Charitable organizations - Protocol
- Pension Funds - Protocol
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Investment
-Financing?
-Formalities?
Formalities?
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Withholding rates - Dividends
Dividends
g rate in US
Residents in Chile – Withholding
5% - owner holds more than 10% stock
5 % - all other cases
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Pension Funds are exempt
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Dividends (from the US to Chile)
United States corporation without with
tax treaty tax treaty
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Dividends (from Chile to the US)
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Investment
Investment in In Chile:
the US
Aceitunas Chile S.A gets a credit for US
taxes paid, including part of underlying tax
Aceitunas
Chile S.A.
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Withholding rates - Interest
Interest
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Interest
4% - 4% and 35%
Eagle Bank
Eagle Inc With Tax treaty:
4% 10%
- 4% - financial institutions
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Withholding rates
Royalties
- 2% equipment rentals
- Computer software
- Most favored nation treatment
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Royalties
Research Inc
Research Inc develops a formula for the
use by Técnica which pays for the right to
Develops a use that formula. Payments from Chile to
US.
formula for
Payment
th use b
the by No tax treaty: Withholding tax in Chile 30%
to the US
Técnica
With tax treaty: Withholding tax max 10%
Credits?
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Services
Services performed by a US company in
the US for a Chilean company. Payments
Service provider from Chile to US
i the
in th US Is there a permanent establishment in
Chile?
Facts:
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TAXATION OF A DUAL RESIDENT INDIVIDUAL
Facts (continued):
•The taxpayer owns a residence in Chile and has recently
purchased a residence in the US. Both residences are available to
him at all times continuously.
The taxpayer spends a similar amount of time in Chile and the US
•The
during the year.
• When the taxpayer returns to Chile he resides with his wife.
•The taxpayer is a member of the Golf club located near his
residence in the US.
Th ttaxpayer h
•The has a ffamily
il member
b iin th
the US.
US
•The taxpayer maintains a home loan with a Chilean bank. The
taxpayer
p y maintains US credit card accounts and owns US shares &
options.
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TAXATION OF A DUAL RESIDENT INDIVIDUAL
If unresolved…
- Mutual agreement procedure
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TAXATION OF A DUAL RESIDENT INDIVIDUAL
YES
NO
Does the individual have a permanent home in Individual is a resident of the State
the two States? where he/she has a permanent home
NO
YES
Does the individual normally stay (“have an Individual is a resident of the State
habitual abode”) in only one of the two States? where he/she has an habitual abode
NO
YES Individual is a resident of the State of
Is the individual a national of only one of the two
States? which he/she is a national
NO
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Employment Income
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Pensions
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Thank you
Website: www.sii.cl
Liselott Kana: [email protected]
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