Chile has a two-stage corporate income tax structure.
- Declared profit is subject to first-stage income tax at 20%.
- Second-stage corporate income tax is levied on profit distributed to resident individuals or non-resident shareholders or partners. For distribution to non-Chilean resident shareholders, the second stage tax applies at a rate of 35% with an imputation credit for the first-stage corporate income tax paid.
Interests, royalties and fees paid to non-Chilean residents are subject to withholding tax at rates as high as 35%.
Tax on mining activities
In addition to the corporate income tax, mining companies also pay a specific income tax on mining activities to the government. This tax is levied on operational income obtained by the mineral exploiter from mining activities. The tax is charged at a progressive rate and varies from 5% to 34.5% resulting in a 14% effective rate, if the mining company’s annual sales exceed over 50,000 tons of fine copper. The rate was increased in October 2010, replacing the previous rate.
Mines whose annual sales have an equivalent value between 12,000 and 50,000 metric of fine copper, are charged a progressive tax rate between 0.5% and 4.5% while those with annual sales less than 12,000 metric tons of fine copper do not pay the tax.
Large mining companies currently pay a flat 4% or 5% rate under tax stability agreements. Once they expire they will be subject to the mining tax at the rates previously discussed.
KPMG’s Global Mining Institute recently released its mining guide for Chile. The mining guide covers the competitive landscape of the mining industry in Chile, with respect to the economic, fiscal, and regulatory environment.
Read KPMG’s mining guide [PDF 1.7 MB] for Chile.