Legal Late Fee Penalty in Chile

A pioneer of economic liberalization policies in the late 1970s and 1980s, Chile became a world leader in promoting free trade and experienced a period of rapid social and economic development. Today, Chile is the first country in Latin America in the 2020 versions of the United Nations Human Development Index (HDI) and the United Nations Gender Development Index (HDI). On May 16, 2019, the law commonly known as the «Thirty Day Payment Act» (hereinafter the «Act») comes into force. This law stipulates, among other things, that invoices issued by any type of company must generally be paid within a maximum period of 30 days from receipt. With regard to the application of the legal payment period, in cases where the parties have not agreed on a longer period, the maximum payment period is 60 days for the first 24 months from the publication of the law, i.e. until 17 May 2021, when the period will be reduced to 30 days. Yes, it is possible to claim a refund of the VAT credit obtained on the purchase of goods forming part of the taxable person`s fixed asset, provided that the VAT credit has been accumulated over a period of six months or more. Non-residents or residents of Chile are taxable persons who supply services subject to distance tax acquired in Chilean territory by natural or legal persons. Agreements that do not meet one or more of the above requirements are considered unwritten, and the general legal payment term (30 or 60 days, depending on the stage of entry into force of the law) applies.

The law provides for a statutory interest rate for cases where the debtor of the invoice does not comply with the legal payment terms. This rate is the current interest rate for transactions not indexed over a period of 90 days in Chilean pesos for amounts greater than the equivalent of 200 Unidades de Fomento[1] and less than or equivalent to 5,000 Unidades de Fomento[2][3]. Interest runs from the first day of delay (day 31 or 61 depending on the date of entry into force of the law) until full payment of the invoice. The law provides for a minimum interest rate and a flat-rate penalty to be applied in case of late payment. In addition, the law provides for the payment of a fixed collection fee of 1% of the amount due in the event of non-compliance with the legal payment conditions. * This report contains general information on legal or commercial issues specific to Chile and is not intended to analyse in detail the issues contained therein, nor to provide specific legal advice on them. The reader is advised to seek the assistance of a lawyer before making a decision on the issues discussed in this report. This report may not be reproduced by any means or in part without the prior consent of DLA Piper BAZ| NLD SpA 2019.

The penalty varies depending on non-compliance or violation of tax laws. Penalties may be imposed as follows: a fine of a fixed amount or a percentage of the corresponding tax due (e.g. between 5 and 300 % of the tax due); temporary closure of the store; or prison. Subscribe to our newsletter to receive the latest business news and advice on business formation, legal entity compliance, accounting, back office and tax requirements. If you do business in Chile that pays for goods and services, it`s important to comply with local billing requirements to avoid penalties or administrative inconveniences that would hurt your business. The following article highlights some of the key considerations related to invoicing requirements for a foreign company in Chile – one of the most developed and prosperous countries in Latin America and a popular destination for foreign investment. At Biz Latin Hub, our multilingual team of accounting and tax specialists is able to help you navigate all kinds of corporate regulations, including understanding invoicing requirements for a foreign company in Chile. With our full range of legal, HR, commercial agency and tax advisory services, we can be your single point of contact to ensure the success of your business in Chile as well as in each of the other 15 Latin American and Caribbean countries where we operate. The invoicing requirements for a foreign company in Chile require that all companies that legally operate in Chile can issue an invoice when selling a product or service. Similarly, any organization that develops business transactions with another organization or service provider must always issue an invoice.

As the country faced atypical social upheaval just before the global pandemic, this was reassured by a new constitution being drafted during 2021 that promises to address some cost-of-living issues. Apart from these riots and a student protest in 2012, Chile enjoys a stable social and political environment, and the country is known to have the lowest crime rate in the region. Marketing Permission: By submitting this form, I agree that Biz Latin Hub may contact me via email using the information I have provided in this form and to provide me with updates on operations, company formation, entity compliance, accounting, back-office services, PEO and/or for marketing purposes. Finally, the Act amends Law No. 20.169 on Unfair Competition, making non-compliance with the legal deadline for payment of invoices unfair. Books, accounting records and invoices are kept for as long as the tax limitation period exists. If the appropriate tax return is filed, the limitation period is three years. Otherwise, the limitation period is six years.

The export of goods is generally exempt from VAT. Exporters can recover the VAT they have paid on their purchases, supplies, hired services or imports, either as a VAT credit on VAT levied on their local activities or in cash. The tax authorities may allow certain companies to carry out accounting in a foreign currency (USD, Euro or Canadian dollars). These authorized companies may request authorization to file some or all of their taxes, make payments or request a refund (in the case of an applicable tax credit) in the foreign currency. Reports are submitted monthly/quarterly. You can choose a period that suits you when you register. The deadline for filing and the deadline for payment of the declaration are the first twenty days of the month following the deadline to be announced. e. It must be executed before the date of issue of the corresponding invoice. As a general rule, VAT is due on supplies of goods and services on the date of issue of the invoice or bill of exchange. Learn about the requirements and rules that apply to indirect taxes in Chile.

In addition, the law provides that these public bodies may make payments under supply or service contracts, which the entity concerned certifies in advance the receipt of the goods or services (within eight days for the rejection of invoices). Tags: doing business in Latin America| | Invoice in Chile | Invoices | Invoices in Chile | Provisions relating to | invoices Billing Requirements | Billing requirements for a foreign company| Billing Requirements in Chile | Latin America Yes, they are available under the links Regulations and legislation. Is it possible for the supplier to issue an invoice (i.e. self-billing)? Are audits carried out electronically in your country (e-audit)? If so, what system is used? Chilean Value Added Tax (VAT), also known as impuesto a las ventas y servicios (IVA), is a value-added tax levied by suppliers in the supply chain. VAT applies: Chile recorded positive foreign direct investment (FDI) inflows of $11.4 billion in 2019 and has concluded a number of free trade agreements (FTAs) with major economies in the Americas, Asia and Europe. The South American country is also a founding member of the Pacific Alliance – a regional economic integration effort that also includes Colombia, Mexico and Peru and has ambitions to expand beyond the region. In the case of declarations in a foreign currency, the corresponding fee must be paid by means of a SWIFT transfer identified by a SWIFT code or a BIC (bank identifier). This code allows you to identify the receiving bank during an international transfer.

The currency type (US dollars, euros or Chilean pesos) as well as the frequency of registration and payment must be specified at the time of registration. Once the elections are held, they cannot be changed until 1 January next year. Software, storage, platforms, or IT infrastructure. Are preliminary rulings and tax rulings issued by tax authorities publicly available? Does a foreign company have to appoint a tax representative? Applications for registration of a permanent establishment or local unit must be submitted using Forms 4415.1 and 4418. In addition to the forms, the following documents must be submitted: Is there a special scheme for the sale of a business by one taxable person to another who is not subject to VAT on sale? Yes, special provisions of VAT legislation allow VAT refunds for certain exempt transactions, such as: Can a foreign company recover VAT/GST and other indirect taxes if it is not registered locally for VAT/GST? There are no specific regulations on this matter. In any case, it is advisable to keep all documents relating to taxable transactions carried out in Chile, as long as the limitation period exists, in order to meet all the requirements of the SII in a tax audit. Transfers resulting from company restructuring (mergers or divisions) and the transfer of a company structured in the form of a share transfer transaction are not subject to VAT.