Being the most stable economy in Latin America, Chile has become a popular destination for innovative business ideas and commercial expansion by well-established foreign companies. With its renowned exports of copper, salmon, and distinguished wines, Chile offers strong national sectors for investors. In addition, the rise in tourism has led to the growth of smaller cities and the emergence of new opportunities. These factors, combined with attractive commercial opportunities, make Chile an attractive option for foreign companies seeking additional sources of revenue abroad. Gain insight into Corporate Compliance in Chile now.
Corporate Compliance in Chile – Legal Entities in Chile
To effectively enter the Chilean market, it is important to understand the different types of legal entities available in Chile. However, all Chilean legal structures have similar statutory requirements that must be followed. To ensure compliance with local and national authorities, specific procedures must be followed when establishing a company in Chile. Personalized support and advice from a local law firm can ensure that your company remains fully compliant.
Chile offers various legal structures for companies to undertake activities in the country, ranging from non-profit organizations to stock corporations. Foreign companies can establish a legal entity in one of the following structures:
– Corporation (Sociedad Anónima- ‘S.A.’)
– Simplified Corporation/Company by Shares (Sociedad por Acciones- ‘S.p.A.’)
– Limited Liability Company (Sociedad de Responsabilidad Limitada- ‘S.R.L.’)
– Branch Office of a Foreign Company (‘Sucursal’)
Corporate Statutory Requirements in Chile
One popular type of corporation is the Simplified Corporation, also known as the Company by Shares. This legal entity allows for 100% foreign ownership and can be incorporated with a single shareholder, whether an individual or a company. It is favored by foreign investors due to its flexibility in capital flow.
Once incorporated, all legal entities in Chile, including the Simplified Corporation, must meet specific statutory requirements to ensure corporate compliance. These requirements are not overly complex but require a comprehensive understanding. Ensuring compliance with these requirements is crucial for companies engaging in commercial activities in Chile.
Legal Representative
Every company in Chile must appoint a legal representative during the incorporation process. This representative is typically a local lawyer with expertise in corporate compliance and acts as the legal face of the company before governmental authorities. Some responsibilities of the legal representative include opening and managing corporate bank accounts, negotiating and signing rent contracts, signing commercial contracts on behalf of the company, and engaging with governmental authorities. It is important that the legal representative is either a Chilean national or a foreigner with the legal right to reside and work in Chile.
Fiscal Address
To successfully incorporate a local legal entity in Chile, a fiscal address must be registered. This address serves as the official registered address for the company and is used for all official communication and correspondence. It is a mandatory requirement and must be stated in the company bylaws during the incorporation process.
Tax Compliance
All companies in Chile must prepare and submit regular tax declarations to the national and/or local tax authorities. Specific tax requirements, such as income tax payments and value-added tax (VAT), must be met. VAT is a consumption tax levied on goods and services, with a standard rate of 19% in Chile.
Commerce Custodian
Every Chilean company must register with the Commerce Custodian. This registration ensures transparency and allows third parties to access and review corporate information. Any major corporate changes, such as a change in company owners or registered fiscal address, must be notified to the Commerce Custodian. Failure to register correctly can result in legal consequences, including company deregistration.
Common Questions on Entity Legal Compliance in Chile
When considering operations in Chile, the following are common questions and concerns:
1. What are the common statutory appointments for a company in Chile?
– A legal representative must be appointed, either a local national or a foreigner with the right to live and work in Chile.
2. Is a Registered Office Address required for a legal entity in Chile?
– Yes, a registered local fiscal address is mandatory for all entities in Chile for correspondence and government visits.
Biz Latin Hub can assist you in starting your operations in Chile
Before expanding your operations to Chile, it is crucial to understand and comply with local corporate obligations. Working with a reputable legal and accounting firm can ensure compliance during your company’s expansion in Chile. Biz Latin Hub specializes in assisting foreign companies in setting up their operations abroad.
To learn more about the Chilean economy, business opportunities, and how to navigate corporate compliance in Chile, please contact us today.
Disclaimer: The information provided is for informative purposes only and may not encompass all relevant laws and regulations. Consultation with a professional is recommended for specific cases. The regulatory landscape can change, and interpretations may vary.
