On 24 February 2020, Government published Law No. 21.210 in the Official Gazette and effects as from 1 January 2020. This Law was approved by the Senate on 29 January 2020. The tax reform Law includes:

Corporate income tax

The Law includes a 27% standard tax rate for companies and 25% reduced corporate tax rate for small and medium enterprises (SMEs).

Permanent Establishments

The Law introduces a new definition of permanent establishments by adding an additional text. According to the Law, permanent establishment is defined a place, which is used for the permanent or habitual realization of all or part of the business, business or activity of a person or entity without domicile or residence in Chile. On the other hand, a permanent establishment shall not be deemed to exist if the person or entity without domicile in Chile completely performs secondary activities of the business or line of business, or preparatory activities for its implementation in the country.

VAT

The Law introduced to apply a 19% VAT rate in case of digital services rendered in Chile by non-residents. This change is to be implemented three months after the law is published.