Chile: Tax treatment of income from import and distribution agreement; other direct and indirect tax developments

The tax authority (SII) ruled in Ruling No. 686/2024 that an import and distribution agreement between a winery resident in Chile and a company resident in the United States, which was signed, performed and breached in the United States, generally did not generate Chilean source income for the U.S. company.

On the other hand, fees paid by U.S. company to the winery for terminating the contract and indemnifying the winery for lost profits generated foreign source income for the winery. Such payments did not constitute remuneration for services rendered abroad, however, and therefore were not subject to additional tax.

Read an April 2024 report (Spanish and English) prepared by the KPMG member firm in Chile

Other direct and indirect tax-related topics discussed in this report include:

• Construction contract not taxed as construction of works for public use (Ruling No. 687/2024)
• Tax compliance obligations for dissolution of a company with no “single tax role” (RUT) and no commencement of activities (Ruling No. 683/2024)
• Treatment of income from disposal of shares of a foreign company as foreign source income (Ruling No. 750/2024)
• Taxation of interest on loan transfers made by an entity without domicile or residence in Chile (Ruling No. 801/2024)
• Deductibility of expenses associated with guarantees for the closure of mining operations (Ruling No. 797/2024)
• Instructions on tax measures for the areas affected by the fires in the Valparaíso Region declared as disaster areas (Ruling No. 52/2024)
• Singapore tax system not treated as preferential tax regime (Ruling No. 48/2024)
• Value added tax (VAT) exemption on interest after amendment of the law on money lending transactions (Ruling No. 688/2024)
• Documentation related to the Navarino Law (Ruling No. 752/2024)