Written by Felipe Mac-Conell Osses, Tax Lawyer
On March 6, 2025, Chile enacted key modifications to its international tax framework, reinforcing its commitment to transparency and compliance with global tax standards. The latest updates, introduced through Resolution N°30/2025 and Resolution N°28/2025, redefine the list of jurisdictions considered preferential tax regimes and implement adjustments to the Advance Pricing Agreement (APA regulations. These changes have direct consequences for businesses engaged in cross-border transactions, particularly concerning compliance requirements.
A Shift in Chile’s Preferential Tax Regime List
The Chilean tax authority has updated the classification of jurisdictions with preferential tax regimes through Resolution N°30/2025, removing countries traditionally viewed as low-tax jurisdictions, while adding others based on international transparency standards.
A total of 35 jurisdictions have been removed from the list, among the jurisdictions removed, several financial hubs and offshore territories are no longer classified under Chile’s stricter preferential tax regime. This includes Bermuda, Hong Kong, the United Arab Emirates, the Cayman Islands, the Bahamas, Qatar, and Monaco, along with other Caribbean and Asian jurisdictions. As a result, payments made from Chile to these countries will now be subject to standard withholding tax regulations, rather than the more stringent rules previously applied to preferential tax jurisdictions.
Conversely, 20 new jurisdictions have been added to the preferential tax regime list, including Bolivia, the Vatican City, the Falkland Islands, Martinique, and several French overseas territories. As a result, transactions involving entities in these locations will now face heightened scrutiny, with potential implications such as higher compliance requirements and stricter reporting obligations.
These updates align with Article 41 H of the Chilean Income Tax Law, which classifies a jurisdiction as preferential when it lacks an effective tax information exchange agreement with Chile or fails to meet international transparency standards.
Strengthening Transfer Pricing Compliance
The process of securing an APA includes a pre-consultation stage, which is optional for businesses. This stage allows companies to assess the feasibility of their proposal before submitting a formal request. During the pre-consultation, taxpayers submit basic details about the proposed transactions and their intended pricing methodology. The SII then reviews these details and responds within 2 months, confirming whether a formal request can proceed. It’s important to note that the result of this consultation doesn’t prevent the submission of a formal request later on.
If businesses decide to proceed with the APA, they must submit a formal APA request to the SII. This request includes more detailed information, such as the identification of the taxpayer and related entities, a description of the transactions involved, and the pricing methodology. A transfer pricing study, demonstrating the methods used and justifying the proposed approach, must also be included. Alongside this, businesses are required to provide comprehensive documentation, including financial statements, contracts, and the organizational structure of the business group.
Once the formal request is submitted, the SII has 12 months to evaluate the application and issue a decision. If approved, the APA will apply to transactions starting from the current year, with the possibility of retroactive application to transactions occurring up to 3 years prior to the agreement.
After an APA is granted, businesses must ensure compliance with its terms. The agreement remains valid for up to 4 years, with the SII monitoring compliance through annual reports from the business. If a business fails to meet the agreed-upon terms, the SII has the authority to revoke the APA.
Strategic Considerations for Businesses
Given the recent changes, businesses engaged in cross-border transactions should take proactive steps to adapt to the new regulatory landscape. Companies making payments to or conducting transactions with entities in jurisdictions affected by these updates must review their tax structures and compliance strategies. With the removal of certain jurisdictions from the preferential tax regime list, businesses should assess potential tax savings and evaluate opportunities for restructuring their international operations.
For businesses operating in newly classified preferential tax jurisdictions, enhanced compliance measures will be necessary to mitigate potential tax risks. This includes revisiting documentation requirements, ensuring proper reporting, and considering alternative structuring options to maintain tax efficiency.
Regarding transfer pricing, businesses aiming to secure an APA should carefully assess their pricing methodologies and documentation to meet the SII’s expectations. The optional pre-consultation stage offers an opportunity to gauge the viability of an APA request before committing to the formal application process. Companies should also prepare for post-APA compliance obligations, ensuring that their annual reporting aligns with the terms agreed upon with the SII.
Ultimately, companies operating in Chile should remain vigilant about evolving international tax regulations and engage in proactive planning to ensure compliance while optimizing their tax positions. Seeking professional advice and maintaining open communication with tax authorities will be crucial in navigating these regulatory changes effectively.
Harris Gomez Group METS Lawyers ® opened its doors in 1997 as an Australian legal and commercial firm. In 2001, we expanded our practice to the international market with the establishment of our office in Santiago, Chile. This international expansion meant that as an English speaking law firm we could provide an essential bridge for Australian companies with interests and activities in Latin America, and to provide legal advice in Chile, Peru and the rest of Latin America. In opening this office, HGG became the first Australian law firm with an office in Latin America.
As Legal and Commercial Advisors, we partner with innovative businesses in resources, technology and sustainability by providing strategy, legal and corporate services. Our goal is to see innovative businesses establish and thrive in Latin America and Australia. We are proud members of Austmine and the Australia Latin American Business Council.
Disclaimer: This article is for general informational purposes only and does not constitute legal advice. It does not create a solicitor-client relationship, and readers should seek independent legal advice for their specific circumstances. Harris Gomez Group accepts no liability for reliance on this content.