Administrative Aspects

Administrative, accounting and taxation matters

1. Which are the most relevant procedures to start a business in Chile

1.1. Obtaining a RUT (Rol Único Tributario) –Tax Registry Number

To develop a commercial activity, a Rol Único Tributario or RUT is necessary, which is granted by the Internal Revenue Service (Servicio de Impuestos Internos - SII). The RUT identifies the tax payers of the country.

1.1.1. Who must obtain a RUT

To obtain a RUT is a requirement for foreign investors who wish to initiate business activities in the country according to legal requirements and regulations from the Internal Revenue Service under the following circumstances:

• Nonresident companies in Chile which invest in the country, regardless their form of investment.
• Nonresident individuals and legal entities with no domicile in Chile participating in companies as partners or shareholders.
• Nonresident persons without domicile in Chile opening agencies or subsidiaries in the country or performing activities in permanent commercial establishments.
• Nonresident natural persons who perform as representatives, tourists, international officers and their families as soon as they become residents in Chile and other nonresident persons, if they carry out investments in the country, such as the purchase of real estate.

1.1.2. Simplified procedure to obtain a RUT

Currently a simplified procedure to obtain a RUT is available, addressed to individuals or legal persons with no residency or domicile in Chile, who invest in the country, either in:

• Purchase and sale transactions of shares from open stock companies available at the stock exchange market,
• Instruments with fixed yield,
• Financial brokering instruments,
• Mutual fund quotas
• In certain contracts, aimed to obtain revenues from these operations.

Those entities wishing to carry out these activities may access to this method through institutions operating as trustees (custodios), or also through the same stockbrokers with whom they operate.

1.2. Business Initiation

As a general rule those natural or legal persons starting business or work subject to taxable revenues, further to obtaining the RUT shall file before the IRS an affidavit regarding such initiation.

1.2.1. Who may be exempted from this procedure?

Investors with no domicile neither residence in Chile who only obtain revenues from securities are compelled to obtain a RUT, but do not need to follow the procedures for Initiation of Activities. However, in the case of nonresident persons and persons without domicile in Chile, the Initiation of Activities process should be carried in the event that the company or permanent establishment has been incorporated in Chile to materialize the investment in the country.

In that case, once the company is incorporated, the foreign investor shall comply with this formality before the IRS, which consists in an affidavit by means of which the tax payer informs the IRS that he will perform activities which may be taxable pursuant to the in force tax legislation.

1.3. Dutystamp of documents

1.3.1. Procedure for above is as follows

The authorization and/or duty stamp of documents is a procedure that legalizes the supporting documents for the different operations tax payers carry out when performing their economic activities. It is the authorization from the IRS for a range of documents to be issued electronically and/or the application of a dry stamp on each document and its copies.

1.3.2. Which companies should have their documents stamped

All following tax payers which have initiated business, are obliged to obtain the stamping of their documents, i.e.: individuals, legal entities, Chilean and foreign and other entities without legal status.

1.3.3. Which documents have to be stamped

Compulsory the following documents should be issued and stamped:

• Invoices;
• Voucher, receipts;
• Dispatch voucher (guía de despacho)
• Registry machine paper rolls
• Fees receipt;
• Debit and Credit notes;
• Accounting books, among others.

The first stamping of this type of documents shall be authorized by the IRS office where the tax payer is registered (assigned according to domicile), which will do the prior stamping of these documents, but previously it will verify the activity and domicile of the business within a term not exceeding 10 working days. Once satisfactorily verified, the tax payer may request from the IRS to stamp this type of documents.

2. Is some kind of permit required to carry out activities in Chile?

Permits and Municipal Patents (Commercial License)

The foreign investor has to be aware that the economic activity he intends to carry out in Chile may eventually be subject to permits and special requirements, which will depend on the characteristics of that activity. For this purpose sanitary, health, environmental and municipal variables in general are to be considered. It is advisable that investors obtain information relating to permits which may affect their activities, they must approach the authorities to acquire this information and obtain the information regarding how long will it take to obtain these permits.

2.1. What types of permits or patents exist?

Basically four types of patents exist which are specific for each commercial activity, this means, should the company decide to extend the business to other areas; an expansion of the patent will be required. These categories are as follows:

• Commercial patents, which are granted for business and sales in general;
• Professional patents, which are granted to carry out professional activities;
• Industrial patents, which are granted for the production and manufacture of products; and
• Alcohol patents (license to sell alcohol), which is required to operate restaurants, bars and similar.
  This procedure has to be made before setting up the facility where the business will operate.

2.2. What requirements and documents are needed from the public authorities to obtain permits and municipal patents?

The requirements vary depending on the municipality, however common elements are requested for all activities:

• Legalized incorporation deed of the company, registration with a notary of the extract and publication in the Official Gazette, registration in the Real Estate Property Registry and/or minutes of the Board meeting in which the legal representative of the company, in the case of a Corporation(S.A.) is named.
• Photocopy of the document of initiation of activities before the IRS (SII), authorizing to initiate a business, in case the patent is being requested for the first time.
• Legalized photocopy of the ownership certificate, rental contract, property deed or any other document accrediting the use of the domicile (as may correspond).
• Simple declaration of initial capital.
• Sketch or internal distribution map of the premises or office.
• Feasibility report, building permit and final reception of the premises where the business will be operating (if it is being built), granted by the Division of Public Works of the Municipality.

Furthermore, other authorizations depending on the type of activity which will be carried out might eventually be needed.

2.3. What is the difference between setting up a company with different company capital? For example, between USD 50.000 and USD 100.000

The "Patente Municipal" – Commercial license (determined by the domicile) has to be paid to the Municipality, in case of professional activities, commercial or industrial, the amount to be paid is calculated on the amount of capital of each tax payer and ranges between 0,25‰and 0,5‰, depending on the Municipality. The Municipal Patent has a ceiling of 8.000 UTM (Unidades Tributarias Mensuales), which amounts approximately to 500.000 EE.UU. dollars a year. In the case of a new investment, and for the first year, all “company or registered capital" shall be considered as taxable capital.

3. Is there any territorial restriction to carry out a certain type of economic activity?

It is very important that before renting or purchasing a facility or a land to be used commercially, the city map regulation (Plano Regulador) of each district must be checked, to verify that the area of the purchase or rental for the facility of the company may be used commercially.

4. Which are the accountancy rules?

Accounting registration and accounting information

In general, any company or tax payer shall register its transactions in the following main bookkeeping: in a daybook; a ledger accounts book; and, a book for inventory or stock list and a balance sheet. In addition an auxiliary registry for tax purpose must be kept. These are for registration of sales and purchase daybooks; remuneration book (only for companies with five or more employees); the register for the withholding tax; the registry on stock listings; and the FUT book (Fund of Taxable Income). These books and registers must be stamped by the IRS.

4.1. How to file a tax declaration

Law provides that accountancy must be carried out by a generally recognized accounting system adequately indicating income, expenditure, purchase, investment and other business operations or operations performed by the tax payer, as well as the outcome of the said business, enterprise, operation or activity.

The balance sheets must comprise a twelve month period, except for the first year and at the closing of the business. The balance sheets for tax return shall be filed on 31st of December each year with the IRS, or at the closing down of the line of business. The joint stock companies shall have their yearly balance sheets ready on 31st of December each year or some other dates as provided for in the bylaws.

The companies shall register and do the bookkeeping in their accounting books in national currency, nevertheless, if all or most part of the contributed capital is in a foreign currency, authorization might be sought from the IRS to keep the accounting books in foreign currency.

5. Which are the procedures and requirements to open bank accounts in Chile, including a personal bank account and a company account?

Chilean commercial banks offer virtually all type of bank services. Individuals and foreign establishments can open bank accounts at any bank in Chile if they comply with certain requirements requested normally by the bank.