Chilean companies paying foreign providers: impuesto adicional and treaty relief

A Valparaíso port logistics company hires a Madrid engineering firm for US$18,000 to redesign its warehouse systems. Its finance team plans a simple transfer. The accountant stops it: the payment may be subject to impuesto adicional, Chile's withholding tax on payments to non-residents, and the company has to withhold, declare and pay it before or as the money leaves.

What impuesto adicional covers

Impuesto adicional applies to Chilean-source income paid to non-residents. For companies buying from abroad, the most common cases are:

• royalties for software, trademarks and know-how,
• interest on foreign loans,
• many services, including technical and professional services.

Whether a service is affected can depend on where it is performed and how it is used. Some services performed entirely abroad are treated differently. The law and SII rulings are detailed, so check each new type of payment.

Rates

The general rate is 35 percent. Several categories carry reduced rates; certain technical and professional services, for example, are commonly subject to 15 percent, with higher rates when the provider is in a listed low-tax jurisdiction. Royalties have their own rates.

Treaties

Chile has tax treaties with many countries, including Spain, Mexico, Canada, the UK and others. A treaty can reduce or eliminate impuesto adicional on certain payments. To apply it:

1. Obtain the provider's certificate of tax residence from its tax authority.
2. Obtain any sworn declaration the SII requires.
3. Keep both on file before the payment is made.

The payer is responsible

The Chilean company withholds the tax, declares it and pays it to the SII. If it does not, the SII can collect the tax from the Chilean company. Foreign providers often quote net amounts, so agree who bears the tax before you sign.

Making the payment

Once the tax position is clear, payments abroad are made through banks or payment providers, which may ask for the invoice and contract. Operations above certain thresholds are reported under the Central Bank's international exchange rules.

Paying into Chile: the local rail

Source: CCA Chile. Checked when this guide was last updated; the scheme's own page has the current figures.

Where Rivet fits

Rivet does not calculate or pay Chilean withholding. A Rivet business account accepts registered companies after verification, including Chilean companies, and pays providers in 120+ countries from dollar and other balances, with each payment matched to its invoice and its rate shown before you confirm. Rivet is not a bank; regulated partner institutions hold the funds.