A Tax Modernization Bill introduced into the Senate late last year, includes a proposed Digital Services Tax which would subject certain digital services provided by foreign suppliers to 19% local VAT if such services are provided or utilized in Chile. The Bill is expected to be approved within the next few months and thereafter would enter into force three months after publication in the Official Gazette.
Services included in the new digital tax provision would be the following:
- Intermediation of services rendered in Chile, of any nature, or sales performed in Chile or abroad (if the latter results in an import);
- The supply or delivery of digital entertainment content, such as videos, music, games or similar, through downloads, streaming or other technology, including books, texts, magazines and newspapers;
- Making available software, storage, platforms or technological infrastructure; and,
- Advertising, regardless of the support or media through which it is materialized, delivered or performed.
If approved, Chilean VAT Law would provide for a simplified declaration and payment procedure for services provided to Chilean individuals, under which the foreign supplier would be required to charge VAT in addition to the service price (representing a cost to the taxpayer) and declare and pay it to the Treasury. In the case of services provided to local VAT taxpayers, a reverse charge mechanism would apply.
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