Business Opportunities in Chile
Today, Chile draws in almost the same amount of foreign direct investment (FDI) as Mexico, which is one of the strongest economies in Latin America, although far smaller in terms of geographical size. The country has an increasing middle and upper class and a reinvigorated official attempt to widen investment sources.
Due to its open market principles, absence of tariffs, democratic government, ethical business practices, and low corruption, Chile remains a crucial trading associate and export market for American businesses.
Are you anticipating the chance to set up a business in Chile? If so, this article will walk you through the steps involved in company registration in Chile and starting a business in Chile.
Benefits of Starting a Business in Chile
Starting a business in Chile offers several perks to business owners, such as:
- Being one of the most dynamic countries in Latin America, Chile’s GDP has seen steady growth and is expected to grow further in the coming years. The nation’s nominal GDP was estimated to be 79.9 USD bn in March 2022.
- While setting up a business in Chile, one gets the optimum advantage of the country’s tax rates, which are much lower than the range of Latin American and European countries. This makes it an ideal economy to invest in.
- If you’re looking for a region with the most successful marketplace in Latin America and in terms of market liberalization, Chile is the place for you. It also has business-friendly policies.
- In 2017, the literacy rate of Chile was 96.40%. About 93% of primary and secondary students in Chile are covered by a comprehensive system of educational vouchers (the remaining 7% attend non-subsidized private schools). No matter the industry you target, you will get highly skilled and talented human resources.
- Chile is known to be one of the safest nations for conducting business. In all of Latin America, it presents the least political risk. Moreover, the nation is very stable regarding fiscal, social, economic, and political systems. Additionally, it is a safe nation for ex-pats with excellent security conditions and low crime rates.
- No matter the size of your organization, Chile has the robust market demand and the resources required for success. By putting an emphasis on talent and supporting its policies with money, Santiago, Chile, often known as “The Chilecon Valley,” has emerged as Latin America’s business capital. Government programs that offer incentives are bringing in a lot of tech experts from the US and other countries.
Requirements for Starting a Business in Chile
Organizations must have a clear vision of the project, research the Chilean economy, and commercialize the project before starting a business in Chile. Other necessary prerequisites include:
To set up a business in Chile, you must know about an investor visa. An investor visa will allow you to live in Chile for one or two years. An investor may apply for this visa subclass if they spend at least USD 500,000 on a project. A criminal history certificate, and a letter of sponsorship from InvestChile, the government’s organization for promoting foreign investment are the required documents for this visa.
Choose your company name
Business personnel planning to set up a business in Chile must register a name for their company with the country’s company registry. The registry will verify if the proposed name is available and approvable.
Registered Office Address
All independent contractors who start a business in Chile must have a registered address.
For starting a business in Chile, your company should have a minimum of 2 and a maximum of 50 shareholders.
Unlike in many other nations, there is no bar on the nationality of a company director in Chile; they can be of any nationality.
- Individuals who reside in Chile and/or are domiciled there are often liable for an infinite amount of taxes on their international income, depending on a progressive tax rate that ranges from 0% to 45%. (Complementary Global Income Tax).
- On the other hand, corporations, which acquire residency at incorporation, are entitled to a 27% corporate tax.
- The amount of tax that non-residents are liable for paying on the income of Chilean origin is regulated. The holding tax rate—which is typically fixed at 35%—can vary based on the sort of income received or dispersed overseas.
Types of Business Structures in Chile
One of the following options is available for your self-employment status in Chile:
Individual limited liability company:
- This is the best option if you’re a sole proprietor wishing to incorporate in Chile. A business legal entity known as an Empresa Individual de Responsabilidad Limitada (EIRL) operates independently of its owner and is permitted to carry out all civil and commercial operations.
- This does not apply to any activities that are legally reserved for businesses. While the corporation is solely responsible for the value of all of its assets, the business owner is only responsible for the number of capital investments.
- The firm name must also be descriptive of its operations or feature the identity of its founder.
Limited liability company:
- A company of this type can have 2 to 50 shareholders.
- Its name must mention one or more of the associates or the business it engages in.
- The partners may freely choose the company’s operations and management
- There is no capital investment required.
- A group of stockholders who create a common fund and a board of directors who make decisions based on a majority of votes must constitute a corporation.
- There are two kinds of corporations – a public corporation and a close corporation.
- Each shareholder is responsible for their specific capital contribution only.
- A corporation must rigidly adhere to and pay its initial capital within three years.
- A stock company is handled in a manner nearly equivalent to close corporations and subject to the same rules.
- It comprises one or more people, and shares denote each person’s capital contribution.
Company Registration Process
The steps involved in offshore company registration in Chile are:
1. Determine the type of business.
The very first step is the most crucial before starting a business in Chile. Here, you must decide what kind of company best suits your needs and confirm that you meet all the prerequisites.
2. Obtaining legal counsel in Chile
As previously stated, you must establish a legal adviser in Chile if you are not physically present. He or she needs to be a Chilean native or a foreigner with a valid visa proving residency.
3. Establishing a business in Chile
You must legalize the company after selecting the structure that best suits the form of business you are doing. With the aid of a notary, a deed of incorporation is created and must include the following:
- Name, RUT (taxpayer identification number), country of birth, marital status, address, occupation, and the couples’ participation percentage. Check here
- Indicate whether it is a corporation or if there are partners.
- Location of the business
- Capital of the business, its structure, and the length of time each partner has invested
- Name of the business and its mission
- If applicable, the total number of shareholders, shares, and board members
4. Listing with the Commercial Registry
From the date the deed is certified, you have 60 days to incorporate the company at the Commercial Registry. You can complete this process in person at the Real Estate Registry or online on its website.
Companies must supply the documents mentioned below to complete the procedure:
- Two original records or valid copies of the deed signed by the notary
- The company’s deed of incorporation document and the form N°2 that the Real Estate Registry provides
5. Publication in an official journal
Within the first 60 days, following the company’s registration at the Chilean Registry, you need to publish the firm’s official statement in the Official Gazette.
6. Getting the Rolnico Tributario (RUT) (Taxpayer Identification Number)
Companies must officially establish each business per the Chilean law before receiving its RUT. You must first oversee the company’s RUT with the Internal Revenue Service (SII – Servicio de Impuestos Internos). You are recognized as a taxpayer by this RUT. Consider the following if you are filing for your RUT on behalf of a legal entity:
- When you announce the beginning of your company’s operations, you must select one or more categories of business activity.
- Companies can obtain the RUT anywhere between 2 months after you begin activities.
7. Establish a business bank account
After the firm has received its legal registration, you must open a bank account with the Chilean bank of your choice. Depending on the requirements of the business, companies can set up corporate banks in either Chilean Pesos or US Dollars.
How Much Does it Cost to Incorporate a Company in Chile?
The cost of incorporating a company in Chile is approximately US$7,200 in the first year. However, the average fees—including opening a corporate bank account, tax registration, project management fees—amount to US$18,385. Here’s a detailed account of the cost of incorporating the various business entities in Chile:
Type of business entity
Are Foreigners in Chile on Certain Passes Allowed to Start a Business in Chile?
There are specific requirements to do business in Chile for foreigners, which are listed below:
- All international workers should apply for a work visa once they have received a job offer or signed a contract in Chile.
- Chile enacted new immigration legislation in 2020 to improve its immigration system, which was released in April 2021 and revised in 2022. Chile’s visa categories have been reorganized per the new law, with the phase-out of the existing residence and work permit categories and the introduction of a new Temporary Residence Visa category with 16 subtypes.
- Foreigners who wish to live and work in Chile must apply for a Temporary Residence Visa. This new visa may be issued for a maximum of two years and may be made permanent in increments of two years.
Government Assistance for Foreign-owned Businesses
- Chile’s foreign investment policy principles are clarity, openness, and non-discrimination. The government has sought to streamline investment processes over the past few years.
- Fiscally, foreign investors have access to the official foreign exchange market with no transaction fees and receive a moderate corporate tax benefit.
- The “Simplified Limited Company” (“empresa individual de responsabilidad limitada” – EIRL”) is a newly created legal kind of company that enables foreigners to start businesses in Chile without the need for local partners.
- The government created InvestChile in 2016, a new national organization that supports foreign businesses with their operations in Chile, as part of a strategy to recruit and promote foreign investment.
- The government has prioritized investment in the following five industries: services to the mining industry, high-end food industry, exportable technology services, tourism, and energy/logistics.
How Can Multiplier Help?
When establishing a business abroad, planning, researching, and funding should be focused on. When the incorporation process is complete, you must hire the right candidate. It is a protracted process that could be difficult without guidance from a global PEO-EOR firm like Multiplier.
Multiplier will reduce your HR workload by managing your worldwide employee team, taking care of employee payroll, and onboarding new hires. Our professionals can help you hire employees abroad and grow your company internationally without the need to establish a subsidiary. You get to discover new markets and emphasize the managerial functions of your firm while we handle the routine HR tasks.