Entry into force of the Agreement to Prevent Double Taxation between Chile and the United States at the beginning of 2024

At the beginning of 2024, the Agreement to Prevent Double Taxation between Chile and the United States will enter into force, making Chile the first South American country to strengthen tax relations with the USA.

Based on the general rule according to the internal regulations of each country, the Withholding Tax (WHT) rates imposed are 30% for the USA and 35% for Chile, rates that will be greatly reduced with the early entry into force of the Agreement. This will bring tax benefits for those remittances originating from business profits, dividends, interest, royalties, capital gains, independent professional services, among other concepts of income.

We highlight the tax exemption arising from business profits, concept for which a WHT of 30% or 35% has been withheld, in addition, royalty payments are benefited with rates of 2% or 10% (depending on the specific case), compared to the 15% or 30% that has been applied to date. Those independent professional services, whether performed by individuals or legal entities, are greatly benefited by being exempted from taxation at the payer’s source, compared to the 15% or 35% WHT that has been withheld so far.

The Agreement opens and facilitates trade between the two countries, but also transforms Chile into a powerhouse for foreign investors from all over the world, precisely because of its strong advantages in international business that any company wants to conduct.

Javier Molina Marín, Tax Lawyer from Auren Chile