Chile: Services subject to VAT

All services provided or used within Chile are subject to value added tax

All services provided or used within Chile are subject to value added tax

All services provided or used within Chile are subject to value added tax (VAT) as of 1 January 2023 (in general and with limited exceptions).

Among the relevant services that are not excluded are medical services and services provided by a professional service company. All services rendered in Chile are subject to VAT even if the beneficiary is not domiciled or resident in our country. In the same way, VAT is levied on services provided from abroad when they are used in Chile, unless they are subject to withholding tax, provided that they are not exempt from such tax by application of the laws or agreements to avoid double taxation.

As a result of the changes introduced, there are a number of transactions and operations that could be affected. All services provided by Chilean companies to abroad will be subject to VAT, generating potential effects in the determination of prices due to the cost associated with the transfer and non-recovery of the VAT to abroad.

KPMG observation

Therefore, taxpayers may need to analyze the possibility of an export service qualification. Services rendered from abroad to companies in Chile that qualify as “technical or professional services” (such as back office, legal, managerial, administrative, accounting, financial, consulting, engineering, etc.) are subject to VAT, unless they are subject to additional tax.

Taxpayers may also want to review contracts involving transactions and payments to and from abroad. These include intercompany or third-party transactions. In particular, taxpayers may need to examine the effect of VAT on services that qualify as “technical or professional services” and on payments to shared service centers for administrative, financial, accounting or other similar functions.

Taxpayers must also analyze the potential effect on the cash flow of the importation of services and the impact on the determination of the taxable basis with respect to the price of the services that have been or may be contracted, since the VAT factor will have a direct impact. Foreign service providers must analyze whether or not there is an obligation to register in Chile as a VAT taxpayer. At the same time, importers of services and foreign suppliers must review tax compliance obligations in respect to the VAT, the regulations regarding the issuance of tax documentation (purchase invoice) and the reverse taxpayer mechanisms available.

In general, taxpayers need to re-evaluate the supply chain of services and payment structures with the purpose of achieving efficiencies in the recovery of the new VAT tax credits to be generated.

For more information, contact a KPMG tax professional in Chile:

Andres Martinez |


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