Chile has adopted a tax credit method for relieving double taxation.

Where payments arise in countries with no tax treaties in force, taxes paid abroad are creditable under the following terms:

i). Income subject to FTC

• Dividends;

• Profits of a PE situated abroad;

• Royalties;

• Fees for technical advice and similar services;

• Fees for the provision of services qualified as exportation;

• Fees and salaries for other services provided by individuals.

 

ii). Creditable taxes

• Underlying tax, if any;

• Withholding tax.

 

iii). Thresholds

• FTC is restricted on an income basis up to 32% of dividends, fees and salaries, and 25% or 27%, as appropriate, of other foreign income;

• A general limitation applicable to the total foreign income derived by the taxpayer, deducting allowable expenses, restricts the FTC to 32%.

 

Where payments arise in countries with tax treaties in force, taxes paid in relation to income covered by such treaties are eligible as FTC under the following terms:

i). Income subject to FTC

• All income covered by the treaty

 

ii). Creditable taxes

• Underlying tax, if any;

• Withholding tax.

• Branch tax.

 

iii). Thresholds

• 35% of the foreign income;

• A general limitation applicable to the total foreign income derived by the taxpayer, deducting allowable expenses, restricts the FTC to 35%.