1. Which are the mechanisms to enter Money to the country? Which are the proceedings to enter capital to Chile?
Regulations include two mechanisms to enter capital to Chile from abroad, first, Title I of Chapter XIV of the Text on Provisions on Foreign Exchange from the Central Bank, and on the other hand, Law Decree 600 of 1974 which establishes the Statute on Foreign Investment.
1.1. Title I of Chapter XIV of the Text containing the Provisions on Foreign Exchange (Compendio de Normas sobre Cambios Internacionales)
This regulation applies to foreign exchange operations dealing with credits, deposits, investments and capital contributions arriving from abroad.
It is a simple registration system, that is, it is not an approval system, and therefore no discretion from the authority is necessary. The procedure is explained below.
1.1.1. Which are the investment amounts applicable hereunder?
Regulations and requirements of this Chapter apply to investments over USD 10.000, or its equivalency in other foreign currency different to the American dollar.
1.1.2. Which is the procedure?
Under this system, the investor shall enter the foreign currency through an institution, member of the Formal Foreign Exchange Market. The Central Bank of Chile has authorized as part of the Formal Foreign Exchange Market all commercial banks and some money exchange offices and stockbrokers.
In general terms, the procedure consists in informing the relevant institutions that a capital amount superior to USD 10.000 will be entering the country, in order to subsequently inform the Central Bank .
1.1.3. Are there any limitations to foreign currency repatriation of profits and remittances in force related to investment?
Other than complying with certain tax regulations and other requirements, in Chile no rules exist restraining the free repatriation of profits. Nevertheless, the remittance of foreign currency must be made by an entity belonging to the Formal Exchange Market.
1.2. What does the Foreign Investment Statute (DL 600) consist in?
The Foreign Investment Statute enables foreign investors to celebrate a contract with the State of Chile which allows entering capital to the country with some additional legal guarantees.
1.2.1. To which operations is this law applicable?
This Law is addressed to all investors with a capital limitation to be entered not superior to USD 1.000.000.
Among the additional benefits we can highlight the access to a special tax regime assuring tax invariability at an only rate of 42% as total tax on Revenue. This benefit extends for the term of 10 years starting as of the date of the operational commencement of the so called company. Otherwise, the common regime governed by the Revenue Tax Law may be chosen, at a rate of 35% (Additional Tax).
The capital may be in foreign currency or other type of goods different to money. Furthermore, this capital may be received by an existing company, either by capital increase, transfers, acquisitions, or by a new entity incorporated for this purpose.
1.2.2. Are there any restrictions regarding repatriation of profits and remittances of foreign currency related to investment under Law Decree 600?
Repatriation of capital can be carried out only after one year has elapsed since it entered the country. Repatriation of profits may be carried out at any moment, since these remittances are not subject to a certain term.
1.3. Which are the advantages and disadvantages of both systems?
Text on Provisions relating to Foreign Exchange:
- In relation to the provisions established under Chapter XIV, it is important to point out that free access of foreign capital is being sought after by the Chilean Exchange Market. Therefore it offers a way to enter foreign currency quickly to the county and relatively free from state intervention. For this reason it is the most used mechanism.
- Nevertheless, the disadvantage of this regulation is that only contributions in “money” are allowed to enter the country.
Decree Law 600
- The advantages offered by the Foreign Investment Law are, on one hand, a regulation with no tax variations, and on the other hand, the possibility of entering other type of goods, besides foreign currency, such as capital goods, technologies and knowledge, among others.
- However, among its disadvantages consideration should be given to the fact that its Statute is only for a certain kind of investments. Furthermore, when entering into a contract with the State of Chile the process becomes more complex.
