Doing Business in Chile

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Doing Business in Chile

  • How to start a business and business license in Chile
  • Dealing with construction permits
  • Getting electricity
  • Registering property
  • Getting credit
  • Protecting minority investors
  • Paying taxes
  • Trading across borders
  • Enforcing contracts
  • Insolvency
  • Hiring personnel in Chile

About Chile Work and Business

Chile’s economy is the 18th freest to make business in the world. It has a high level of innovation and health economy due to its less bureaucracy than most countries in Latin America. Chiles is the world leading producer of copper. It also exports minerals, wine, wood, seafood and wood as primary products. Great business ideas in Chile are real states and tourism activities. It has a exceptional fiscal discipline which has highlighted GDP growth of 4.9% from 2004 to 2011. 

Opening a business as a foreign requires not only knowledge of the legal implications and procedures of doing business in Chile, but also how much time and money you will invest during the process. Trust and connecting to people its people is crucial to make successful business in Chile.

1. Starting a business in Chile

  The procedure to register your business in Chile  is really simple; 6 steps completed within 4 days, on average.
 

The cost of starting a business in Chile: Registration fee is 2.7% of the estimated income of the business during its first year of operation. The fee is not paid in subsequent years.

These registration fee is below of the line with the OECD average.

  There is no need for the new legal entity in Chile  to prove that it has a bank account in the same country.

How to register a business in Chile?

At: Registro de Empresas y Sociedades
Complete the online draft of the articles of association to obtain an authentication number
At: Registro de Empresas y Sociedades
Register the company as trademark in Chile
At: Internal Revenue Service
Notify initiation of activities
At: Company approved by the Internal Revenue Service
Get digital certificate to enable tax documents
At: Municipality
Obtain a Business License in Chile
At: Labor Insurance
Mandatory register with the labor-related accident insurance

2. Construction permits in Chile

 

Once interest gathers all information needed, the procedure to legally build a commercial facility (warehouse, offices, etc.) is 12 steps. Average completion time is 195 days.

The procedure itself is similar to other countries, while completion time is slow.

  Money invested during the process is equivalent to 1.2% of the commercial real estate value. This is an low-cost process compared to other countries.
  Construction standards in Chile are higher than average.  According to the Building Quality Control Index, or BQC,Chile enjoys a rating of 13 out of 15.

Procedure

At: Sanitation Company
Request and get indication on water and sewagep
At: Private licensed company
Get results of geotechnical study
At: Municipality
Obtain “Certificado de Informaciones Previas”
At: Regional Sanitary Authority (Secretaría Regional Ministerial de Salud (Seremi)
Obtain risk assessment
At: Sanitation Company
Get water and sewage supply
At: Municipality
Request provisional installation to have services while construction takes place
At: Municipality
Obtain building permit
At: Municipality
Receive inspection in middle of construction
At: Sanitation Company
Water services connection
At: SERVIU
Get certificate of compliance for roads and sidewalks
At: Municipality
Final inspection
At: Municipality
Request project approval

3. Getting electricity in Chile

  The process to get electricity connection is 5 steps and 43 days of time spent. In comparison to other countries is a fast method.
  Money invest through procedure is 48% of income per capita. In a monthly bill for commercial warehouse the tariff is 10 US cents per kilowatt-hour. Which means the procedure is low-cost but the tariff is expensive in comparison to other countries.
  The reliability between duration and frequency of power in relation to the tariff is measure from 0 to 8, being 8 the best one. In Chile electricity reliability is above the average with 7 points.

4. Registering Property in Chile

  In comparison to other countries Chile has a low-step but time-consuming procedure for property registration. They are 6 steps that can be done in 28.5 days.
  The invest needed in this procedure is 1.1% of the property value. Value added tax and capital gain tax are excluded. Chile is above the average cost for this operation.
  Quality of land administration in Chile is 14 out of 30. It indicates not-so-good reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution and equal access to property rights.

5. Getting Credit in Chile

  Lender/borrowed confidence is low in Chile, which enjoys a rating 4 out 12.
 

Rules affecting the reach of accessible information and its quality are measured through the Depth Credit Information index, from 0 to 8; 8 being the best one.

Chile´s rate is 7, hence this information is reachable and above the average.

6. Protecting Minority Investors in Chile

In overall, minority investors are protected in Chile in a average to high rate compared to other countries. Only, corporate transparency on ownership stakes, compensation, audits and financial prospects is a extent of corporate transparency that leaves much to be desired.

7. Paying Taxes in Chile

  The new company in Chile must pay 7 contributions per year.
  Time invested in collecting information, computing tax payable, separating tax accounting books, completing tax return, filling with agencies, arranging payment or withholding throughout the year is 296 hours. This is a lot of spent time compared to other regions in the world.
  Companies in Chile make contributions of total tax for about 34% of profit.
  Average time elapsed to comply VAT refund, to obtain VAT refund, to comply with corrections and to complete them is low compared to other countries.
Post filing in Chile is fast.

8. Trading across Borders in Chile

  Time and cost to obtain, prepare and submit documents compliance to export in Chile is 54 hours and $50USD. This process is not as much as efficient than other countries.
  Time and cost to obtain, prepare and submit documents to import in Chile is 36 hours and $50USD. Compared to other countries, Chile is about the average.
  Time and cost to customs clearance and inspection for export products is 60 hours and $290USD.
This is above the average in compare to other countries.
  Time and cost to customs clearance and inspection for import products is 54 hours and $290 USD. Compared to other countries, companies will spend more time and money than average to import products.

9. Enforcing Contracts in Chile

Time and cost for resolving commercial disputes. This evaluates the legal dispute process and the quality of legal institutions.

  Typical time in Chile to file a lawsuit, go to court and receive a judgment is 519 days. This is slow in compared to other countries.
  The cost to enforce the contract to courts including attorney fees, court costs and enforcement cost is 25.6% of the claim value. This is a low cost compared to other nations.
  Court structure, case management, court automation and alternative dispute resolution makes quality of judicial processes is not-so-good in Chile compared to other countries.

10. Bankruptcy in Chile

Bankruptcy is the legal proceeding that involves businesses or persons that are unable to repay debts. It is the legal means to insulate itself from creditors.

  Time to recover debt in Chile is 2 years, this includes appeals and requests for extension. Compared to other countries in Latin America & the Caribbean this is comparatively fast.
  In Chile, compared to other countries the cost required to recover debt is low. This is measured as a percentage of estate value including court fees, insolvency administrators, lawyers’ fees, assessors and other related fees.
  In many situations a company bankruptcy will continue operating until unable to do so or business assets are sold. In Chile there is a tendency for companies to continue operating after filing for bankruptcy.
  The credit recovery rate is calculated by dividing the total payment amount by the amount of debt. It measures the cents on the dollar recovered by secured creditors. Companies in Chile have a recovery rate of 41.9 cents per dollar.

11. Hiring workers in Chile

For detailed information visit: Key Labor Laws in Chile and What you need to know about employing personal in Chile.

Hiring Employees in Chile Companies can not defined a labor agreement if the nature of the work is undefined. The minimum wage is $450.9 US per month.
Working Hours in Chile A standard workday is 9 hours a day 6 days a week. Overtime is paid as +50% of hourly pay and there are no restrictions working at night or weekend. If the employee works on its  weekly rest day, this must be paid as +50% of hourly pay. Vacations are 15 paid leave days.
Termination in Chile The employment may terminate at any time if this is mutual agreement, death of the employee, expiry of the fixed term or the completion of the work. Resignation of the employee can happen with 30 days of prior notification.  If the employment termination is based on the general grounds, such as changes economic conditions or downsizing of the company, a severance compensation equivalent to one month will be awarded to the employee.

References:

Economy Profile

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