L egal -Economic Aspects of Investing in Chile
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Transcript of L egal -Economic Aspects of Investing in Chile
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Legal-Economic Aspects of Investing in Chile
Gustavo Cuevas
InvestChile March 2012
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Index
I. Why Chile ?
1. Dynamic politics
2. Economic model
3. Trade relations
II. Set up Business in Chile
1. Protection of foreign investments
2. Different types of companies
3. Residency for foreigners in Chile
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First Part:
Why Chile?
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1. Dynamic Politics
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A. Political Stability
• Chile stands out in the region
• Peaceful cohabitation of all political sectors
• Continuity of public policies
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B. Legal Safety
• Well-defined political and legal structure
• Clearly separated powers
• Legalistic culture
• Special protection for foreign investors
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C. State Support
• There is political will. The necessary Instruments to implement innovative and technological transfer businesses
• Existences of instruments that favour setting up industries in different regions of Chile
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D. Flexibility of Labour Law
• Freedom to hire and dismiss employees
• Low employer contributions
• Solutions to impartial conflicts
• Clear, uniform and stable regulations
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2. Economic Model
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A. Open Economy• Widespread national consensus on the importance of free
trade
• Low import duties
• Free movement of capital, goods and people
• No discrimination against foreigners
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B. Taxes
• Low corporation taxes
• Trade agreements to prevent double taxation
• No tax discrimination between locals and foreigners
• Clear, uniform and stable regulations
• Modern technologies applied in tax inspection.
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C. Banking System
• An autonomous Central Bank with a clear, constitutional mandate
• Strict banking regulations
• Autonomous and professional regulatory organisation
• Professional and capitalised banks
• Important technological leadership
• Nationwide coverage
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3. Trade Relations
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A. Communication Infrastructure
• Extensive coverage of low-cost, data communication
• Appropriate road infrastructure
• Appropriate and low-cost port and air infrastructure
• Infrastructure planning based on Chile’s growth needs
• Proximity between production centres and shipping areas
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B. Free Trade Agreements• Chile has signed the most free trade agreements in the world,
covering 89% of the world GDP.
• The contents of these agreements is extensive and they cover key economic sectors
• There is a free trade agreement between the EU y Chile.
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C. Tax conventions tending to avoid double taxation
• Agreement to avoid double taxation between Chile and Belgium (since 2011)
• Tax Variable without negative effect
• Clear and specific regulations to ensure tax neutrality
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D. Common Cultural Values with Europe• Intolerance of corruption
• Respect agreements
• Work culture
• Efficient State
• Integrated society
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E. Chile : Investment Platform
• Time zone for the Americas
• Knowledge
• Language
• Agreement with MERCOSUR and free trade agreements
• Personal safety
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Second Part :
Setting up Business in Chile
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1. Protection of Foreign Investments
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A. Constitutional Level• Property rights
• Economic freedom
• State’s subsidiarity principal
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B. Legal Level
• Foreign Exchange Regulations at Banco Central de Chile (Chapter XIV)
• Decree Law No. 600 (DL.600)
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C. Contents of Foreign Investment Contract• No discrimination
• No discretion in procedures• Free access to production sectors
• Contract with the Chilean State• Access to the formal exchange market
• Repatriation of capital and profits• Choice of taxation system
• Various investment methods
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2. Different Types of Businesses
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• Joint stock company
• Public Limited company
• Limited liability company
• Incorporation period
• Incorporation expenses
• Foreign participation in companies
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3. Residency for Foreigners in Chile
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A. Visa
• For investors
• Subject to a work contract
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B. Taxes
• Taxes are mandatory in Chile
• Agreement to avoid double taxation
• Agreement to recover retirement funds
• Specific work contract regulations
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End
Gustavo Cuevas InvestChile
March 2012