Chile: Draft guidance clarifying VAT obligations of nonresident sellers
Draft circular proposes to clarify the VAT sourcing rules for remote services and new VAT collection obligations for remote sellers of goods
The Chilean tax authority (SII) on December 3, 2024, published draft Circular Letter 300079.2024GE, which would clarify the value added tax (VAT) obligations of nonresident sellers.
Background
Chile recently adopted the Tax Compliance Bill, which introduces new reporting obligations for platform operators, clarifies the VAT obligations for platform operators, and introduces new VAT collection obligations for remote sellers of goods to consumers in Chile. Read TaxNewsFlash
The draft circular proposes to clarify the VAT sourcing rules for remote services and the new VAT collection obligations for remote sellers of goods to consumers in Chile.
Remote services
The draft circular explains that the term "remote" refers to services provided from far away, regardless of how they are delivered. This could include digital services, but also services delivered through other means. For example, intermediary services and advertising could fall into this category. This means that any service provided by businesses outside of Chile and used within the country is considered “remote.” However, the draft circular also clarifies that the law does not intend to tax services that are not used or provided in Chile.
While nonresident digital services providers have already an obligation to register for, collect, and remit VAT in Chile through a simplified compliance mechanism, such an obligation did not exist for providers of remote services. The draft circular clarifies that starting from November 1, 2024, these businesses will need to register under this simplified system when they provide remote services to people living in Chile.
Remote sellers of goods to consumers
According to the Tax Compliance Bill, if a foreign business sells goods to local customers, and the goods are valued at less than USD 500 or its equivalent in local currency, they will need to register under the simplified tax system. The bill shifts the VAT liability to digital platforms facilitating the sale of such goods.
The draft circular clarifies that starting from October 24, 2025, these sellers and platforms will be required to register for, collect, and remit VAT through the simplified compliance mechanism.
Despite these changes, the draft circular explains that the online portal for foreign taxpayers will keep its name, "Portal IVA Digital," and the tax on these services will continue to be referred to as "IVA Digital" for ease of communication.
For further information, contact a KPMG tax professional:
Philippe Stephanny | philippestephanny@kpmg.com
Javiera A Suazo | javierasuazo@kpmg.com
Juan Infante | juaninfante@kpmg.com
Francisco Rocca | frocca@kpmg.com