Chile: Simplified tax regime for digital services

As of 1 June 2020, Law N° 21.210 added the letter n) to the article 8 of the VAT Law, which determines that foreign companies providing digital services are subject to 19% Value Added Tax (VAT) in Chile.

This tax obligation is only for foreign taxpayers without domicile or residence in Chile, who provide remote services to be used in the national territory by individuals or legal entities who are not taxpayers of VAT. The services in question are: the intermediation of services rendered in Chile or of sales made in Chile or abroad, provided that the latter give rise to an import (of goods); the supply of digital entertainment content, such as videos, music, games, or other analogous content, by means of downloading, streaming or other technology, including texts, magazines, newspapers, and books; the supply of software, storage, computing platforms or infrastructure; advertising services, regardless of the medium or medium through which they are delivered, materialised, or executed.

In that sense, Law N° 21.210 establishes a simplified tax regime applicable to the provider of digital services referred to in letter n), article 8 of the VAT Law, who is neither resident nor domiciled in Chile, provided that the consumer is a natural person who is not a VAT taxpayer.

The registration to this regime is carried out through the official website of the Internal Revenue Service (‘Servicio de Impuestos Internos’ – ‘SII’), and the service itself has determined that the registration to this regime does not constitute a permanent establishment in Chile.

The taxpayer is obliged to charge VAT to the final consumer and declare and pay it to the tax authorities. The tax period may be one month or one quarter (three consecutive months) at the taxpayer’s choice, and the deadline to file the tax return and pay the tax is the 20th day of the month following the declaration period.

Under this regime, the service provider is not required to register in the Unique Tax Registry, nor issue tax documents for the services rendered and keep accounting records. It is also not entitled to a tax credit against the tax charged to consumers of the digital service.

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