The 2012 worldwide VAT, GST and sales tax guide

VAT return periods
Thresholds
Registration
Recovery of VAT by
nonestablished businesses
B. Scope of the tax
Monthly
None
No
C HILE 109
In general, VAT is imposed on the sale of tangible goods located
in Chile, and on the provision of services rendered or utilized in
Chile. The following are significant aspects of the VAT rules in
Chile:
• For VAT purposes, the law provides that sales are all transactions
that result in the transfer of movable tangible goods. A
seller is any person that habitually carries out this kind of
operation. The sale of real estate can also be taxed under certain
circumstances.
• Services are all actions that any person does for another for
consideration (payment) if the service rendered arises from the
exercise of one of the activities mentioned in Section 20 of the
Income Tax Law, Subsections 3 and 4 (Subsection 3 provides
rules regarding income that arises from commercial and industrial
activities, and Subsection 4 governs income obtained by
agents and commissioners in general).
• VAT also applies to the importation of goods into Chile.
• Other taxable transactions specified by law include, among others,
withdrawals of inventory, contributions in kind and leasing
of movable goods.
C. Who is liable
A VAT taxpayer is an individual, business or entity that performs
VAT taxable transactions (that is, the habitual transfer of goods or
the rendering of listed services) in the course of doing business in
Chile. No VAT registration threshold applies. All business entities
must file a business initiation application on commencement of
operations and an application for a taxpayer identification number
(RUT). These measures also apply to permanent establishments
of foreign entities in Chile.
Group registration. VAT grouping is not allowed under the
Chilean VAT law. Legal entities that are closely connected must
register for VAT purposes individually.
Nonestablished businesses. A “nonestablished business” is a
business that has no fixed establishment in Chile. If a nonestablished
business intends to carry out transactions in Chile that are
subject to VAT (such as the transfer of goods or the provision of
listed services), it is required to be registered for VAT purposes.
Consequently, the nonestablished business must submit an application
for an RUT number and a business initiation application,
and must appoint a representative in Chile to act on its behalf.
However, taking these actions may result in the conclusion that
the nonestablished business has become a permanent establishment
(PE) in Chile.
Tax representatives. A tax representative must be provided with
the power to represent the business in its dealings with the tax
authorities and must also register an address in Chile for this purpose.
If a foreign individual is appointed as the tax representative,