|VAT Rate on Digital Services||VAT on Cross-Border Electronically Supplied Services||Digital Reporting Requirements for Foreign Sellers Providing Electronically Supplied Services|
VAT on Cross-Border Digital Services in Chile
Chile introduced VAT on digital services supplied by foreign companies to end customers (B2C) in 2020.
Foreign suppliers of digital services are expected to register and charge VAT on sales to end consumers in Chile.
The intermediation of services by marketplaces or online platforms will shift the VAT liability from the supplier to the marketplace or platform.
Digital Services in Scope
The following digital services supplied by foreign companies are subject to VAT in Chile:
- Digital entertainment content, such as videos, music, games or other analogous content, by means of downloading, streaming or other technology, including for these purposes, texts, magazines, newspapers and books
- Software, storage, computing platforms or infrastructure (e.g. SaaS)
Determining the Location of the Chilean Consumer
Chile determines the location of the customer based on the following criteria:
- The IP address of the device used by the user or other geolocation mechanism indicates that the user is in Chile
- The card, bank account or other means of payment used is issued or registered in Chile
- The address indicated by the user for billing or issuance of payment vouchers is located in Chile
- The SIM card of the cell phone through which the service is received has Chile as the country code
At least two should be fulfilled for the service to be considered as supplied in Chile.
VAT Registration for Foreign Companies
Foreign digital service providers should apply to register for VAT with the Chilean Tax Authority as soon as they start the taxable activity. Applications are processed by the Servicio de Impuestos Internos (SII).
Foreign companies are subject to a simplified tax regime. They cannot recover local input VAT and are not obligated to issue tax invoices.
- VAT registration threshold for non-resident suppliers of Digital Services: No registration threshold
- Fiscal representatives: Mandatory
- Applications to commence VAT registrations can be made here on the SII’s website
VAT Returns and payment of taxes
VAT returns for non-residents
Non-residents must file using the simplified return.
|VAT Return Name||F129|
|Filing Frequency||Monthly or quarterly (frequency elected by the taxpayer)|
|Filing Deadline||20th of the following month|
|Payment Deadline||Same as the filing deadline; a local bank account is not required|
|Payment Currency||US Dollars, Euros or Chilean Pesos|
|Input Tax Recovery||Not allowed|
|Record Storage||6 years, location is chosen by the taxpayer|
Digital Reporting Requirements for Cross-Border Digital Services
Foreign companies under the simplified tax regime do not have to adhere to the e-invoicing requirements since they are released from the obligation to issue tax invoices.
Foreign Intermediaries Withholding VAT
In the case of B2C services, foreign companies under the simplified tax regime must collect and pay VAT. If the foreign company does not complete the simplified registration procedure, the tax authority may order the credit card issuer responsible to withhold and pay the VAT.
If a marketplace is involved in facilitating the supply of digital services, it will be responsible for withholding and paying VAT.