Chile's Tax System and Regulatory Framework in 2025

Chile maintains a centralized tax administration, with municipal authorities limited to collecting business license fees. The country operates under a territorial tax system, where every individual and legal entity is assigned a unique taxpayer identification number known as RUT (Rol Único Tributario). For Chilean citizens, the national ID issued by the Civil Registry serves as the RUT, also used across various civil procedures. Foreign investors and corporate entities receive their RUT from the Internal Revenue Service (SII). In August 2018, the Chilean government introduced the Tax Reform Bill (Law No. 21210), proposing key changes such as reduced taxes for small and medium enterprises (SMEs), higher income tax brackets for high earners, VAT imposition on foreign digital platforms, and extended tax incentives for remote regions. After 17 months of legislative review, the bill was approved in January 2020 and officially enacted on February 24, 2020. These reforms continue to shape Chile’s fiscal landscape into 2025.

Key Taxes and Rates in Chile

Understanding Chilean Tax Units

In Chile, financial and tax calculations often use indexed monetary units—UF (Unidad de Fomento), UTM (Unidad Tributaria Mensual), and UTA (Unidad Tributaria Anual)—which are adjusted daily based on inflation. As of July 2023, the exchange rate stood at approximately 815 Chilean pesos (CLP) to 1 USD. At that time, 1 UTM equaled 63,300 CLP, 1 UF was valued at around 36,100 CLP, and 1 UTA amounted to 759,000 CLP. These units help stabilize tax liabilities and contractual values amid economic fluctuations.

Corporate and Personal Income Taxes

• First Category Income Tax (Impuesto de Primera Categoría):
  • 27% rate: Applies to corporations with annual revenues exceeding 75,000 UF.
  • 25% rate: Applies to businesses with annual sales of 75,000 UF or less, supporting SME competitiveness.
• Second Category Income Tax (Personal Employment Income):
  • Progressive rates ranging from 4% to 40%, applicable to individuals earning above 13.5 UTM annually. This tax is withheld at source and credited against final tax liability.
• Third Category Income Tax (Other Personal Income):
  • Also features progressive rates from 4% to 40%, but applies to non-employment income (e.g., rental, investment returns) exceeding 13.5 UTA per year.
• Mining Royalty Tax (Impuesto Especial Ad Valorem Minero - IEAM):
  • 5–14% progressive rate: Targeted at mining firms selling over 50,000 tons of refined copper annually.
  • 0.5–4.5% progressive rate: Applies to companies producing between 12,000 and 50,000 tons of copper equivalent.
• Additional Income Tax:
  • Nominally set at 35%, this tax effectively requires companies to pay 15% after deducting 20% of already-paid corporate tax, ensuring minimum tax compliance.

Certain types of foreign-sourced income distributed abroad—such as dividends or royalties—may be taxed at preferential rates between 2% and 35%, depending on treaty provisions and structure.

Value-Added Tax and Surcharges

• Value-Added Tax (VAT): Standard rate of 19% applies broadly across industrial and commercial sectors, including imports and most services.
• Alcohol Excise Surcharge: Imposed on importers with tiered rates: whisky and spirits at 27%, wine and beer at 15%.
• Luxury Goods Surcharge: Two-tier structure:
  • 15% on items like gold, platinum, jewelry, furs, carpets, and caviar.
  • 50% on fireworks, explosives, and pyrotechnics not used for industrial, agricultural, or signaling purposes.

Special Excise Taxes

• Fuel Tax: Levied per cubic meter—6 monthly tax units (UTM) for gasoline and 1.5 UTM for diesel—borne by end consumers.
• Tobacco Tax: High excise rates apply: 52.6% on raw tobacco, 60.5% on cigarettes, and 59.7% on cigars, reflecting public health policies aimed at reducing consumption.

Legal and Documentary Taxes

• Stamp Duty: Ranges from 0.033% to 0.4%, imposed on legal documents, contracts, and corporate filings.
• Check Tax: Assessed based on stamp duty principles, applying to check issuance.
• Municipal Business License Tax: Charged at 0.25% to 0.5% of registered capital, capped at 8,000 UTM per year, payable by all formal businesses.

Specific Insurance and Cross-Border Fees

• Property and Life Insurance Premium Tax: A 22% levy applies to both individuals and companies purchasing domestic insurance policies.
• Reinsurance Premium Tax: Lower rate of 2%, applicable to reinsurance contracts.
• Payments for Foreign Intellectual Property and Consulting: Royalties or fees paid to overseas providers for trademarks, patents, or technical advice are subject to a 35% withholding tax, aligning with anti-base erosion measures.

For multinational employers and expatriate professionals navigating Chile’s evolving tax environment, expert guidance is essential. SailGlobal offers tailored offshore HR solutions, helping international firms ensure compliance, optimize payroll structures, and support cross-border talent deployment in Latin America.