a. Business income tax

Nonresidents carrying on activities in Chile through a Permanent Establishment are subject to business income tax of 25% or 27% on the net profits attributable to the PE.

b. Branch tax

At the time profits attributed to the PE are remitted abroad, or attributed by the PE to the head office, a branch tax is applicable with a rate of 35%. Business income tax paid would be deductible under the same terms as a distribution of dividends.

c. tax base and accounting records

Permanent Establishments are required to keep accounting records, as a separate entity, in regard to transactions with its head office, other permanent establishments of the head office, and other entities, whether related or not. Transfer pricing rules may apply.

Profits attributed to the PE must be derived from activities carried on, or assets assigned or used by, the PE. The tax base is calculated by deducting allowable expenses from such profits.

Alternatively, net income of the PE may be calculated by reference to the income of the head office as a proportion of its gross income or assets.

The nonresident must submit a tax return for both, profits attributed to the PE subject to business income tax, and profits remitted abroad or attributed by the PE to the head office subject to branch tax.