CL – Income Tax Treaty with U.S.: Final Stage in Chilean Congress

On October 26, 2023, the Chilean government sent to the Congress the income tax treaty with the U.S. for its final stage of legislative discussion¹.

The United States-Chile income tax treaty was signed in February 2010 and was pending ratification in the United States until June 2023, when the U.S. Senate finally approved and made reservations to it. (For related coverage, see the following issues of GMS Flash Alert: 2023-133 (June 29, 2023) and 2023-114 (June 6, 2023).) Although the treaty was approved by the Chilean Congress in September 2015, the document must be passed by the Chilean Senate given the reservations made by their U.S. counterpart.

Expectations are that the Chilean Congress will approve the treaty, and it could be signed by the executive by the end of November of the current year, thus entering into force by January 2024.

Why this matters

The U.S. Senate’s approval of the treaty was a significant step forward to fostering an improved business environment – including the movement of globally-mobile employees coming to the United States from Chile or vice versa – between the two countries.

This treaty should help mitigate double taxation that international assignees can be exposed to and may provide further benefits, including relief for contributions to pension plans.

KPMG Insights

Short-term assignees (known also as “business travelers”) could be exempt from taxation in the host country if their presence is for less than 183 days in any 12-month period, with no charge-back and no payments made locally, thus bringing more flexibility to employers with regards to short-term assignment planning and budgeting as they seek to expand their commercial footprint.

Contacts

Angelo Adasme

Partner, Tax - IES

KPMG in Chile

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Gustavo Maldonado

Director

KPMG in Chile

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Additional Resources

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Footnotes

¹Article published (in Spanish) on the Ministerio de Hacienda (Chilean Ministry of Finance) website on October 26 , 2023, at: https://www.hacienda.cl/noticias-y-eventos/noticias/gobierno-envia-a-tramitacion-acuerdo-que-evita-la-doble-tributacion-con-estados .

Disclaimer

The information contained in this newsletter was submitted by the KPMG International member firm in Chile.one

GMS Flash Alert is a Global Mobility Services publication of the KPMG LLP Washington National Tax practice. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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Chile – Income Tax Treaty with U.S.: Final Stage in Chilean Congress