Download Legal-economic aspects of investing in Chile by Gustavo Cuevas

Legal-Economic Aspects of
Investing in Chile
Gustavo Cuevas
InvestChile
March 2012
Index
I. Why Chile ?
1. Dynamic politics
2. Economic model
3. Trade relations
II. Set up Business in Chile
1. Protection of foreign investments
2. Different types of companies
3. Residency for foreigners in Chile
First Part:
Why Chile?
1. Dynamic Politics
 A.
•
•
Political Stability
Chile stands out in the region
Peaceful cohabitation of all political sectors
•
Continuity of public policies
 B.
•
Well-defined political and legal structure
•
Clearly separated powers
•
•
Legal Safety
Legalistic culture
Special protection for foreign investors
 C.
•
State Support
There is political will. The necessary Instruments to implement
innovative and technological transfer businesses
•
Existences of instruments that favour setting up industries in
different regions of Chile
 D.
•
Flexibility of Labour Law
Freedom to hire and dismiss employees
•
•
•
Low employer contributions
Solutions to impartial conflicts
Clear, uniform and stable regulations
2. Economic Model
 A.
•
Open Economy
Widespread national consensus on the importance of free trade
•
•
Low import duties
Free movement of capital, goods and people
•
No discrimination against foreigners
 B.
•
•
•
Taxes
Low corporation taxes
Trade agreements to prevent double taxation
No tax discrimination between locals and foreigners
•
•
Clear, uniform and stable regulations
Modern technologies applied in tax inspection.
 C.
•
Banking System
An autonomous Central Bank with a clear, constitutional mandate
•
•
Strict banking regulations
Autonomous and professional regulatory organisation
•
Professional and capitalised banks
•
Important technological leadership
•
Nationwide coverage

3. Trade Relations
 A.
•
Communication Infrastructure
Extensive coverage of low-cost, data communication
•
•
•
•
Appropriate road infrastructure
Appropriate and low-cost port and air infrastructure
Infrastructure planning based on Chile’s growth needs
Proximity between production centres and shipping areas
 B.
Free Trade Agreements
•
Chile has signed the most free trade agreements in the world,
covering 89% of the world GDP.
•
The contents of these agreements is extensive and they cover
key economic sectors
•
There is a free trade agreement between the EU y Chile.
 C.
•
Tax conventions tending to avoid
double taxation
Agreement to avoid double taxation between Chile
and Belgium (since 2011)
•
•
Tax Variable without negative effect
Clear and specific regulations to ensure tax
neutrality

D. Common Cultural Values with Europe
•
Intolerance of corruption
•
Respect agreements
•
•
•
Work culture
Efficient State
Integrated society
 E.
Chile : Investment Platform
•
Time zone for the Americas
•
Knowledge
•
•
Language
Agreement with MERCOSUR and free trade agreements
•
Personal safety
Second Part :
Setting up Business in Chile
1. Protection of Foreign Investments
 A.
Constitutional Level
•
•
•
Property rights
Economic freedom
State’s subsidiarity principal

•
B. Legal Level
Foreign Exchange Regulations at Banco Central de Chile
(Chapter XIV)
•
Decree Law No. 600 (DL.600)
C. Contents of Foreign Investment Contract
•
•
•
No discretion in procedures
Free access to production sectors
•
•
No discrimination
Contract with the Chilean State
Access to the formal exchange market
•
Repatriation of capital and profits
•
•
Choice of taxation system
Various investment methods
2. Different Types of
Businesses
•
•
Public Limited company
•
Limited liability company
•
•
•
Joint stock company
Incorporation period
Incorporation expenses
Foreign participation in companies
3. Residency for Foreigners
in Chile
A. Visa
•
•
For investors
Subject to a work contract
B. Taxes
•
•
•
Taxes are mandatory in Chile
Agreement to avoid double taxation
Agreement to recover retirement funds
•
Specific work contract regulations
End
Gustavo Cuevas
InvestChile
March 2012