Chile payroll and tax overview.

Your guide to doing business in Chile

Doing Business in Chile

Foreign Direct Investment in Chile

The government has focused on developing a stable economy and political environment to provide businesses with a consistent economy to operate within. The government welcomes inward investment from foreign entities, particularly in growing markets that are key for the future long-term Chile GDP.

Registering a Company and Establishing an Entity in Chile

Registrations to the tax and social security authorities for companies looking to process payroll in Chile include; “Registro Publico de Comercio” and “Servicio de Impuestos Internos”. The estimated timeline for the completion process is between 15 and 20 days with the inscription to Registro Publico de Comercio.

Business Banking in Chile

It is mandatory to make payments to employees and authorities from an in-country bank account.

Banks are open from 0900 to 1400 Monday to Friday and are closed on Saturdays and Sundays.

Working Week and Working Hours in Chile

The working week in Chile is Monday to Friday; the standard working week is usually made up of 45 hours. The maximum number of hours permitted is 45. The maximum number of ordinary hours a dependent can work is 10 hours per day.

Basic Facts about Chile

General Information

Population: 18.05 million (World Bank, 2017)

Capital: Santiago Major

Language: Spanish

Religion: Christianity

Monetary Unit: Chilean peso CLP (the symbol used locally for it is $)

Main Exports: Copper, fish, fruit, paper, pulp and chemicals

GNI per Capita: US$11,097 (World Bank, 2018)

Internet Domain: .cl

International Dialing Code: +56

 

Hello Hola

Good morning Buenos días

Good evening buenas noches

Do you speak English? Habla usted Inglés?

Good bye Adiós

Thank you Muchas gracias

See you later Hasta luego

 

Dates are usually written in the day, month and year sequence. For example, 1 July 2014 or 1/7/14.

Numbers are written with a period to denote thousands and a comma to denote fractions. For example, CLP$ 3.000,50 (three thousand peso and fifty centavos).

Income Tax & Social Security in Chile

The tax year runs from 1 January to 31 December.

Income Tax in Chile

Employee deductions for taxes range from 4% to 35% depending on income level.

Monthly contributions must be made from the 10th-12th of every month to the tax authority. The typical penalty awarded for the late submission and payment of tax contributions is 2-5 %. This can vary depending on the delay time and the institution (ISAPRES, MUTUAL, CCAFF, AFP, ETC).

Social Security in Chile

Employee deductions for social security come to around 20%.

  • 10% Pension Fund System
  • 7% Health Insurance
  • 0.6% Unemployment Insurance
  • 0.93% Chilean Association

There may also be a further contribution for “heavy” work - depending on the level of accident risk relating to the company’s activity. For this, the employer and the employee must contribute 2% of the salary.

The typical penalty awarded for the late submission and payment of tax contributions is 2-5%.

Reporting Tax in Chile

Monthly

  • The employer must pay taxes to the SII (Servicio de Impuestos Internos, “IRS” national tax agency) and the applicable Social Security Institutions.

Yearly

  • In March, the employer must present an annual income report to the SII for each employee with the detail of retentions made during the last year.

New Starts in Chile

It is mandatory for the employer to publish its own social constitution in the official bulletin, and it must register itself in the Public Commerce Registry. It is also obliged to notify the start of activities towards the SII.

A new employee must be registered with the authorities within 60 days from the start date of employment, in which the company has to present its structure to the SII and await authorisation to start operations.

The following information is required to set up a new start:

  • Full Name
  • RUT
  • Date of Birth
  • Address
  • Salary
  • Pension Insurance
  • Health Insurance
  • Other Information About Hiring

Leavers in Chile

The company has to notify the Inspeccion del Trabajo of any leavers.

The deadline for an employee’s final payment in Chile is 10 working days.

Payroll in Chile

It is legally acceptable in Chile to provide employees with online payslips, but the employer should have a copy signed by every employee.

By law, payroll reports must be kept for five years.