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Chile

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Business environment

The consumer

Consumer Profile
Chile's population is ageing but remains relatively young. The median age is 36.3 years, and the population is growing at a rate of 0.3% with 32.1% of the population under 25 and 24.6% over 55 years old (Data Reportal, 2022). Households are on average composed of 2 people, the size of the household is in net decrease in recent years. One-person households are becoming more widespread. Regarding the gender ratio, there are 97 men for every 100 women in Chile. The Chilean population is spread out with 87.9% in urban areas and 90% located in the middle of the country around the capital of Santiago and the north. The south of the country is very sparsely populated. The main cities are Santiago, Valparaiso and Concepcion. The level of education in Chile is among the lowest in OECD countries with 32.6% of adults aged 25 to 64 having attained below upper secondary education and 25.2% having a tertiary education (OECD, 2020).
Purchasing Power
The GDP per capita (PPP) in Chile is approximately USD 25,110 (World Bank, 2020). The average salary per full-time worker per month is CHP 635,134 (INE, 2020). Because inflation has risen faster than wage growth at the end of the year purchasing power has declined in 2020. Confidence indexes have strongly eroded since the start of the protests, which cumulated with the deteriorating job market weakening household consumption and private investments. The Gini index on income inequality is high but has been declining for several years. Chile has one of the highest gender pay gaps in the OECD, and this gap is even greater for skilled trades.
Consumer Behaviour
Chile's consumption no longer serves to meet the needs but denote a certain social status. The country's growth has enabled consumers to have better quality products. Price remains the main factor in purchasing decisions but other determinants are quality, durability, technology, customer service, customer experience, and availability. Despite the persistence of the Covid-19 pandemic and the war in Ukraine, consumer confidence has been on an upward trend since 2021. Purchases are made in bricks and mortar stores but also online. Often, consumers will preview products on the internet before buying it in a store. E-commerce platforms are growing and online sales reached USD 7 billion in 2021 (+23% year-on-year) (ecommerceDB). Consumers are generally open to international brands but may prefer local brands for certain products (such as wine). Chileans are generally not very loyal to brands with nearly 70% expressing their independence from them. Access to social networks is growing in the country but mostly for entertainment purposes. However, some consumers consult brand profiles when they want product information. Chileans generally have enough confidence in the authorities regarding the protection of personal data.
Respect for the environment is becoming increasingly important in consumption decisions. In Latin America, Chile is considered the most aware of environmental issues. Consumers are paying increasing attention to labels on the products they consume. The second-hand market has developed through markets or thrift stores. Collaborative platforms are developing in Chile, like Airbnb and Uber, but mainly in big cities.
 
Online food and drink sales totaled 1.2 billion and grew by 133% in 2020 (US Foreign Agricultural Service).
Consumer Recourse to Credit
With regards payments, cash is the most widespread. About 58% of the population uses debit cards while credit cards are used by only 30% of the population. Household debt is rising sharply and exceeds 72% of their disposable income. According to a survey conducted by the country's central bank, 66% of Chileans have debts, divided into 71% consumer loans, 21% mortgages and 7% other debts. Consumer loans finance a lot of education costs, the purchase of cars (80% of car purchases are made through consumption credits), the cancellation of other debts and the purchase of household items. People with low incomes also use consumer credit to finance basics such as food and medical expenses. According to research from Oxford University, Chile is among the high-risk countries because of the sharp rise in private debt. If expansion continues, the authorities may put in place measures to curb credit.
Growing Sectors
Dishwashers, kitchen blenders, microwaves, refrigerators, vacuum cleaners, medicines, food supplements, sports products and services, laundry care, car rental, travel, home audio devices, mobile phones, cell phones, beer and cars.
Consumers Associations
Asociación de Consumidores y Usuarios de Chile
National Consumer Association
Consumer Association
 

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Importing & Distributing

Import Procedures
Chile is a very open market. All natural persons or legal entities are authorised to carry out import transactions. Special permission, certificates, and approval documents, such as sanitary and phytosanitary certificates, are required for most agricultural products and in certain cases for industrial products. The importer must present an "Informe de Importacion", a document that must go through the commercial bank. This license is used above all for statistical purposes.
The commercial forms used by both importers and exporters are commercial invoices, certificates of origin, bills of lading, freight insurance and packing lists. Special permission, certificates, and approval documents, such as sanitary and phytosanitary certificates, are required for most agricultural products and in some cases for industrial products.
All goods must be accompanied by original paperwork, including Waybill and Commercial Invoice.
- Waybills requirements: receiver’s complete legal name, company name (if applicable), complete phone number, complete address
- Invoice requirements: sender’s logo (if a company), date of issue, full sender & receiver’s information (name, address), company name or receiver name and commercial address, manufacturing country and brand, full description of products per item and/or Commodity Codes, contents, quantity, FOB (Free on Board) value, weight and model. Pro-forma invoices are not acceptable.
Certain items will require a Material Safety Data Sheet (MSDS), a completed SAG (Agricultural and Livestock Service) Affidavit Form or permission from Chile’s National Health Service (Servicio Nacional de Salud, SNS) for release.

For more information, please visit the website of the Chilean National Customs Service.
Specific Import Procedures
Chile only approves the import of processed food products on a case-by-case basis. To bring in a product, the importer must obtain the permission of the Health Service Officer at the port of entry.
For more information about the import of agricultural products, please consult the website of the Chilean Ministry for Agriculture.
Distribution channels
The Chilean food retail sector is composed of a mix of large supermarkets, mid-sized grocery stores, convenience stores, gas station markets and thousands of smaller independent neighborhood convinience stores. The Chilean retail industry is the most developed in the Latin American region, with retail sales reported at USD 27.9 billion in 2020, with a 2.9% increase over the previous year (US Foreign Agricultural Service). Supermarkets food sales totaled USD 15.1 billion, or 54.2% of total food sales in 2020 (US Foreign Agricultural Service). On-line food sales are growing, boosted by the social distancing measures and strict quarantines implemented in 2020 to avoid the spread of the COVID-19 virus. Online food and drink sales totaled 1.2 billion and grew by 133% in 2020 (US Foreign Agricultural Service).
According to the National Institute of Statistics (INE), in 2019 (latest available data) the Chilean food retail sector comprised 1,382 stores, including hypermarkets, supermarkets and other small food retail stores with a minimum of three checkouts, with 34% of them are in the Metropolitan region.
It is worth noting that Chile is becoming increasingly urbanised. This is not only true in the Santiago Metropolitan Region (which accounts for one-third of the country's population), but also in provincial or second-tier cities. The distribution sector has been adjusting to this trend, especially grocery retailing, which has been adopting a convenience store model through chained convenience stores and smaller supermarkets located close to consumers in the middle of residential neighbourhoods. This development is also due to a scarcity of retail space and Chilean consumers' interest in convenience.
Distribution market players
The distribution sector in Chile is highly concentrated with only a small number of actors sharing a majority of total sales. There are eight major supermarket chains in Chile, targeting different customer profiles with different format stores, spread all over the country.
Chile’s main supermarket groups in 2020 were (US Department of Agriculture):
- Walmart Chile, the largest supermarket chain in the country in terms of revenue with a market share of approximately 12.9%, operating around 363 stores under the Líder and Express de Líder brands
- Cencosud, with a market share of around 7.5%, operating around 247 hypermarkets and supermarkets under the Jumbo and Santa Isabel brands
- SMU is the third largest chain with a market share of 6% and 290 stores under Unimarcbrand
- Tottus (owned by Falabella) with a market share of 2.1% and 69 hypermarkets and supermarkets.
 
Retail Sector Organisations
Asociacion Gremial de Supermercados de Chile

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Operating a Business

Type of companies

Empresa Individual de Responsabilidad Limitada (EIRL) is a Sole Propietorship company
Number of partners: One natural person.
 Capital (max/min): No minimum capital.
 Shareholders and liability: Liability is limited to the amount contributed.
Sociedad de Responsabilidad Limitada (LTDA) is a Private Limited Company.
Number of partners: Minimum 2 partners, maximum 50 partners, who have property rights.
 Capital (max/min): No minimum capital.
 Shareholders and liability: Liability is limited to the amount contributed.
Sociedad Anonima (SA) is a Public Limited Company. Can be public or private.
Number of partners: Minimum 2 partners.
 Capital (max/min): No minimum capital. One-third of the capital must be paid at the creation of the company and the remainder within three years.
 Shareholders and liability: Liability is limited to the amount contributed.
Sociedad en Commandita is a Limited Partnership.
Number of partners: Minimum 2 to a maximum of 50 partners. Two types of partners: active partners and silent partners.
 Capital (max/min): No minimum capital.
 Shareholders and liability: Liability is limited to the amount contributed for the silent partners, and unlimited for the active partners.
 
Setting Up a Company Chile Latin America & Caribbean
Procedures (number) 6.0 8.0
Time (days) 4.0 25.2

Source: Doing Business - Latest available data.

 

Cost of Labour

Minimum Wage
CLP 350,000 per month (source: Chilian Ministry of Labour, 2022).
Average Wage
Gross average annual wage in Chile is USD 26,729 (source: OECD, 2020).
Social Contributions
Social Security Contributions Paid By Employers: Accident insurance: 0.93%
Contributions varying according to the risk of the employment activity: maximum 3.4%
Unemployment insurance: 2.4%
Life and disability insurance: 1.99%
 Social Security Contributions Paid By Employees: Health insurance contribution: 7%
Pension fund contribution: 10%
 

Intellectual Property

National Organisations
The bodies in charge of protecting patents and trademarks in Chile are the Instituto Nacional de Propiedad Industrial (INAPI) in Santiago and the Departamento de Derechos Intelectuales.
Chile signed the Paris Convention for the protection of industrial property, as well as the agreement establishing the World Intellectual property Organization (WIPO). Patents obtained in other countries are valid in Chile until the expiration of their normal date of validity.
Regional Organisations
The issue of intellectual property is addressed in the treaty of MERCOSUR, which includes Chile, Argentina, Brazil, Paraguay, Uruguay and Bolivia.
International Membership
Member of the WIPO (World Intellectual Property Organization)
 Signatory to the Paris Convention For the Protection of Intellectual Property
 Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)
 

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Tax Rates

Consumption Taxes

Nature of the Tax
Impuesto a las Ventas y Servicios o IVA (Value-Added Tax or VAT, in English).
Tax Rate
19%
Reduced Tax Rate
No reduced rates apply; however, certain products/services are exempt from VAT (see above).
Other Consumption Taxes
Specific items are subject to taxes imposed under the VAT law ranging from 10% to 50%, including jewellery (15%); alcoholic beverages (from 20.5% for fermented to 31.5% for distilled); soft drinks with high sugar content (18%); other natural or artificial soft drinks, including energy or hypertonic drinks (10%); and 50% over the first sale or import of pyrotechnic items.
 

Corporate Taxes

Company Tax
27%
Tax Rate For Foreign Companies
A corporation is considered resident or domiciled in Chile if it is incorporated in the country. To determine whether an entity is considered to have a permanent establishment in Chile or not, the substance-over-form principle applies, meaning even though domestic requirements are not met, the taxpayer corporation may choose to be treated as a local PE in order to be allowed to deduct its business expenses.
Capital Gains Taxation
Capital gains are subject to standard corporate tax but may be exempt based on certain criteria: the length of time the shares are held, the usual or occasional nature of the purchase or resale of shares and the relationship between the seller and the buyer. Gains derived from certain securities are subject to a preferential tax treatment (i.e. investment funds’ quotas listed on an authorised stock exchange market, stock of listed local companies, mutual funds’ quotas if the fund invests in stock trade values, etc.).
Capital gains obtained upon the alienation of real estate may be considered as non-taxable income in certain cases.
Main Allowable Deductions and Tax Credits
In general, expenses incurred to generate taxable income can be deducted.
Deductible expenses include net operating losses, payments to foreign affiliates, and taxes (not including income taxes). Subject to conditions, interest expenses can be deducted. Under certain circumstances, bad debts and charitable donations (up to 5% of the company's net taxable income) can be deductible. The deductibility of payments made abroad for the use of trademarks, patents, formulas, consulting and other similar services is limited to a maximum of 4% of the income derived from sales and services in the corresponding year. Start-up expenses can be amortised over a six-year period. Fines, penalties and the respective legal costs incurred are deductible, subject to conditions.
Losses can be carried forward indefinitely, while carrybacks are not allowed.
Other Corporate Taxes
Other taxes include a stamp tax (maximum 0.8%), municipal license fee, real property tax (1.4% in case of non-farming real estate and 1% for farming real estate, exemptions apply), payroll taxes (ranging from 0% to 40% of employees' remuneration), and social security contributions, as follows:

- a monthly 0.93% premium on remuneration for labour-related accident insurance
- 2.4% of the worker’s gross salary for compulsory unemployment insurance contribution
- a 1.85% premium for life and disability insurance
- additional contributions depending on the risk of the employment activity, at rates of up to 3.4%.

Other Domestic Resources
Internal Taxes Service (SII)
 

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
Servicio de Impuestos Interno - SII
Withholding Taxes
Dividends paid by Chilean entities to resident individuals are subject to a global complementary income tax at progressive rates that range from 0% to 40%. Profits distributed abroad to non-resident/non-domiciled taxpayers are subject to an additional withholding income tax of 35%
Interest: 35% (4% in some cases, like for interest on loans granted by a foreign bank or international financial institution and by an insurance company or pension fund that complies with certain registration requirements)
Royalties: 15% (invention patents, computer programs, utility models, industrial designs and drawings, blueprints or topography of integrated circuits, and of new vegetable varieties)/30% (trademarks, patents, formulae, and other similar services; and in case the beneficiary is resident in a jurisdiction with a preferential tax regime).

Special interest and royalties rates apply to residents of countries with which Chile has signed a double taxation treaty.

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