Chile’s tax authority has clarified how tax residents must report directors’ fees received from foreign companies under Official Ruling No. 2695. The guidance covers income classification, taxable income calculations, social security deductions, foreign tax credits and exemptions from monthly provisional tax payments.
Chile’s tax administration (SII) has issued Official Ruling No. 2695 on 8 October 2026, which provides definitive guidance on how a Chilean tax resident must declare tax directors’ fees (asignaciones de director) received from a company incorporated abroad in a jurisdiction with an active Double Tax Treaty (DTT) with Chile.
Reclassification of foreign directors’ fees
Chile’s tax authority (SII) clarified that directors’ fees paid by foreign companies do not fall under Article 48 of the Income Tax Law (LIR). This provision applies to fees paid by corporations established under Chilean law and does not cover foreign entities incorporated and governed under foreign legislation.
Instead, directors’ fees paid by foreign companies are classified as income from independent professional activities or lucrative occupations under Article 42 No. 2 of the LIR, provided there is no employment relationship. For individuals resident or domiciled in Chile, these fees are subject to Global Complementary Tax under Article 43 No. 2, provided Chile retains the right to tax the income under the applicable double tax treaty.
Income tax base determination & social security deductions
Under Article 50 of Chile’s Income Tax Law (LIR), directors reporting income from independent professional activities under Article 42 No. 2 can calculate taxable income by deducting actual necessary expenses or applying a flat 30% deduction to annual gross income.
Chilean social security contributions are deductible only for directors who declare actual income and are enrolled as independent workers in a Chilean pension scheme. Those who use the 30% presumptive expense deduction cannot deduct these contributions. Mandatory foreign social security contributions withheld abroad may be deductible under the general business expense rules in Article 31 of the LIR.
Sourcing rules & treatment of withheld foreign taxes
The tax treatment of directors’ fees in Chile depends on where the duties are physically performed. Fees for duties performed abroad are treated as foreign-source income under Article 12 of the Income Tax Law (LIR). Global Complementary Tax is calculated on the net liquid income received, excluding foreign taxes withheld at source from the initial taxable base. By contrast, fees for directorship duties performed remotely from Chile are classified as Chilean-source income and taxed on a received basis under the general tax rules.
Foreign tax credit mechanism
Under Article 41 A of Chile’s Income Tax Law (LIR), Chilean-resident directors can claim a foreign tax credit against their Global Complementary Tax (IGC) for income taxes withheld abroad. For income classified under Article 42 No. 2, the credit is applied against the IGC calculated on the grossed-up taxable income determined under Article 41 No. 3, which includes eligible foreign taxes in the calculation base.
Compliance & provisional payment relief
Under Article 68 bis of Chile’s Income Tax Law (LIR), directors must issue electronic fee receipts (boletas de honorarios electrónicas) to foreign companies. Independent service providers are generally required to make monthly provisional tax payments (PPM) under Article 84(b), at a rate of 15.25% in 2026, rising gradually to 17% by 2028 under Law No. 21,133.
However, directors are exempt from these monthly payments if their foreign fees were taxed abroad and the foreign tax qualifies for a credit under Article 41 A of the LIR.
