Chile’s tax authority (SII) has published Letter Ruling No. 369 on 14 February 2025 regarding foreign tax credits for taxes not covered by a treaty.
The letter addresses whether a credit applies to US state taxes on income from technical assistance services and confirms that these taxes are not covered by the Chile-US tax treaty, which only applies to federal taxes. However, a foreign tax credit may be available under Article 41A of Chile’s Income Tax Law for qualifying foreign income, regardless of whether the tax was paid in a country with or without a double taxation agreement.
The regulation permits the avoidance of international double taxation on income taxed both abroad and in Chile by granting tax credits, provided all legal requirements are satisfied.
To qualify, the taxed income must fall under paragraph 1 of Article 41A. In this case, the services provided are covered by subparagraph 1(c), which includes income from professional or technical services.
A foreign tax credit is available for US state taxes on this income, provided other legal requirements are met.
