Chile: Application of U.S. income tax treaty to royalties on feature film

A report discussing recent direct and indirect tax-related topics

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December 20, 2024

Royalties paid by a U.S. taxpayer to a Chilean company for a license to distribute the Chilean company's feature film across various streaming platforms may be subject to a 10% rate of withholding on the gross amount of royalties under the Chile-U.S. income tax treaty, which includes a definition of royalties that expressly covers payments for the use or right to use cinematographic films.

If Chile also taxes the royalties, Chile must grant a credit for the withheld taxes.

Read a December 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:

  • Application of U.S. income tax treaty to private investment funds
  • Application of Article 107 of the corporate income tax law to redeemable investment funds
  • Tax Treatment of the "Simple Agreement for Future Equity" (SAFE)
  • Declaration and payment of value added tax (VAT) in the simplified taxation regime for nonresident taxpayers
  • Issuance of extemporaneous purchase invoice
  • Application of general anti-abuse rule (GAAR) to corporate reorganization
  • Disproportionate distribution of dividends in relation to capital
  • Tax criteria applicable to the ISIF
  • Credit for corporate income tax paid with the balance of existing VAT credit at the end of commercial activities
  • Issuance of tax documents for interest charges in credit operations
  • Instructions on capital repatriation
  • Credit established in the Austral Law in case of economic infeasibility of investment project 

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