insurance
& taxes
Personal Income Taxes
During the first three years of residence in Chile, foreigners
are subject to tax only on their Chilean-source income. This period
may be extended.
Foreigners are considered residents if they reside in Chile for
more than six months in one calendar year, or for more than six
months within two consecutive assessment years.
Thereafter, resident foreigners are taxed on all income, and tax
rates, though falling, are high. In 1995 the top marginal rate was
48 percent on annual income exceeding US$75,000. This rate fell
to 45 percent in 1996.
Taxable income includes all remuneration received under an employment
contract, including entertainment expenses. Not taxable are family
allowance payments, social security benefits established by law,
severance payments, and board and lodging provided for the convenience
of the employer.
Personal income tax rates are progressive and range from 0 percent
to 45 percent levied on "tax units," whose value changes monthly
according to the consumer price index variation. This is expressed
as a Monthly Taxable Unit (MTU) and is about Ch$20,673.
Taxable income rates, expressed in MTUs, are: under 10, no tax;
10-30, 5 percent; 30-50, 10 percent; 50-70, 15 percent; 70-90, 25
percent; 90-120, 35 percent; 120 and above, 45 percent.
Capital gains on sales of personal property not used in connection
with a trade or business are exempt from taxation. Real estate,
unless the transaction is considered habitual or has occurred within
one year of acquiring the property, is also exempt from taxation.
Those capital gains not exempt are taxed as ordinary income. Capital
gains from stock or other investments, if not considered habitual,
are taxed at a flat rate of 15 percent.
Social security tax is paid at the basic rate of 20 percent. Chile
does exempt expatriates from paying into the social security fund
if their own country's social security system is similar to Chile's.
Personal allowances and deductions are minimal. Spouses are taxed
separately on their personal income, while married couples without
separate incomes are taxed jointly.
Employers withhold taxes from the salaries of employees. In March
of each year, taxpayers must submit to the SII/Servicio de Impuestos
Internos, a detailed list of all taxes withheld. Yearly returns
must be filed by April 30 of each year for income of the preceding
calendar year. A single form is provided by the SII. All supporting
documents should be retained by the taxpayer for possible future
review.
Taxes are payable in local currency at the time the tax form is
submitted.
Other taxes in
Chile
VAT tax
Chile imposes a VAT or Impuesto al Valor
Agregado (IVA) of 18 percent on most goods and services.
Fuel and tobacco tax
Gasoline, diesel oil, cigarettes and cigars are all taxed at the
time of purchase.
Automobile taxes
Used cars are subject to a 0.5 percent sales tax. Imported cars
and locally assembled cars are subject to the customary 18 percent
VAT tax, plus a sales tax which is a percentage of the customs value
based on the size of the engine
Real estate tax
A two percent tax is assessed on the fiscal valuation of real estate
each year on January 1st, and adjusted on July 1st, according to
the increase in the Consumer Price Index. Real estate taxes are
payble in four installments: April, June, September, and November.
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