What Taxes Does a Foreign Company Pay in Chile?

Level one is the First Category tax (Impuesto de Primera Categoría): 27% on the subsidiary’s net taxable income under the general regime of article 14 A, or 25% for qualifying small businesses under the Pro Pyme regime (article 20, Income Tax Law). It is an annual tax, and every peso paid is recorded as a future credit for the owners.

Level two is the Additional Tax (Impuesto Adicional): 35% on profits remitted or distributed to owners without domicile or residence in Chile (articles 58 and following). The subsidiary withholds it at the moment of the remittance, on a base that adds back the credit. The credit itself comes from article 63: the First Category tax paid on those profits offsets the Additional Tax. Under the general regime, however, 35% of that credit must be returned to the treasury, unless the parent resides in a country with an in-force double taxation treaty whose rules make the corporate tax creditable. That single sentence in article 63 separates the two scenarios below.

Both columns assume a company taxed at 27% under the general regime that distributes its entire profit. Partial distributions and Pro Pyme companies change the arithmetic, not the logic. With the levels clear, the next question is what the subsidiary withholds on everything else it pays the parent.

Most cross-border charges inside a group (management fees, license fees, loans) fall under article 59 of the Income Tax Law. The framework matters more than any single number: the rate varies with the nature of the payment, drops for defined categories, and rises when the beneficiary sits in a preferential tax regime. These are the recurring categories for a foreign parent:

Two practical warnings. First, the withholding duty and its penalties fall on the Chilean subsidiary, so every intercompany agreement should state who bears the tax and at what rate before the first invoice. Second, intercompany charges must also survive transfer pricing review (article 41 E): a withholding rate correctly applied to a price the tax authority later rejects is still a problem. Treaties reshape several of these rates, which is where they earn their place.

Chile maintains an extensive network of double taxation treaties in force; the SII publishes the current list. The treaty with the United States has been in force since December 19, 2023, applying from January 1, 2024. Treaties do two different jobs here. On interest, royalties and service fees they cap the domestic withholding: the US treaty, for example, limits interest to 4% for banks and qualifying financial institutions and 10% in other cases (15% during a transition period), and royalties to 2% or 10% depending on type. On dividends they work differently: Chilean treaties preserve the 35% Additional Tax and instead secure the full corporate tax credit described above.

The second job of a treaty is drawing the line for permanent establishment (PE): the point at which a foreign company becomes taxable in Chile on business profits even though it never incorporated. Chilean domestic law has its own definition (article 2 N° 12, Income Tax Law) and each treaty has another in its article 5. A Chilean taxable presence typically arises from:

• A fixed or habitual place of business: an office, branch, workshop or any place used regularly for part of the business, even if shared.
• A dependent agent: someone in Chile who habitually concludes contracts for the foreign company or plays the principal role leading to their conclusion.
• Long projects and service engagements: under the US treaty, a building or installation project of more than six months, or services performed in Chile through employees or other individuals for more than 183 days in any twelve-month period. Several Chilean treaties carry similar services clauses.
• What does not count: activities that are merely preparatory or auxiliary, such as storage, display or information gathering, are excluded under both the domestic definition and the treaties.

The consequence is material: a PE is taxed in Chile on the net profits attributable to it and takes on local filing duties, and its remittances abroad bear the Additional Tax like any branch (article 58 N° 1). Secondments and long service contracts deserve a day-count plan before the work starts, not after. Sometimes the analysis ends the no-entity debate on its own: if a PE is unavoidable, the entity decision is usually cleaner than an accidental PE.

VAT runs at a single rate of 19% (article 14, DL 825) on sales of goods and on services, with the exemptions listed in the law, and it also applies to imports. It is a monthly, invoice-driven tax that starts with the subsidiary’s first sale. Digital services sold into Chile from abroad follow their own track: non-resident providers fall under a simplified SII registration regime (article 35 A, DL 825) with no local entity required. The no-entity guide covers that regime in detail.

This page covers the entry economics. Once the subsidiary operates, the recurring duties (monthly returns, documentation, the framework of Law 21.713) belong to ongoing tax governance, covered in our tax governance guide.