Chile: VAT exemption on import of capital goods

In February 2020, Law 21,210 modified several matters substantially. One of these modifications that is relevant and necessary for the development of Chile is the VAT exemption for the importation of capital goods.

Before this reform, only investors could benefit from the VAT exemption and, in order to apply for the project, they could not generate income for twelve months. Therefore, the scope of the standard was lower. Thanks to the modification of Law 21,210, individuals and legal entities resident in Chile or foreign investors, as well as companies receiving foreign investment, may be eligible for the benefit.

The main requirement for the application of the exemption is to use capital goods for investment projects. Therefore, the person who carries out the import does not have to be the same person who develops the project, so that it can be developed either by the importer itself or by a third party.

The project must involve an investment of USD 5 million as at the filing date of the applica-tion. It must not generate income before two months of entering the country or acquisition in Chile of the first capital goods, the exemption of which from Value Added Tax is required, or from the Environmental Qualification Resolution, or the concession of onerous use of land, as the case may be. The project previously required not generating income within twelve months and fewer projects met the requirement. This is a meaningful modification.

Said request must be presented before the Chilean Ministry of Finance, via its website https://hacienda.cerofilas.gob.cl/. The password of the applicant or its representative in the case of legal entities is needed to access the website. All the founding documents of both the capital assets and the investment project must be uploaded.

The Ministry of Finance will verify compliance with the requirements. Within 60 calendar days, the Ministry will issue a resolution granting or not granting the exemption and sending it to the SII (“Servicio de Impuestos Internos” – Internal Revenue Service). Within this period, if there are no comments on the matter, the request is considered to be accepted. The SII could also request a background review within 15 business days.

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