Chile

Ease of Doing Business Rank: 59

Overview

 

 

Geographic location

Chile is a southwestern country in South America. The Pacific Ocean lies to the west, the South Atlantic Ocean to the south, Argentina and Bolivia to the east and Peru to the north.

Spoken language

The official language of Chile is Spanish, spoken by 99.3% of the population as their first language.

German and English are the most widely-spoke foreign languages. English is used for international business.

Population

The 2019 population estimate is 18.95 million.

According to 2017 census, the metropolitan area of the capital city of Santiago is the largest urban area (6.13 million). Greater Concepcion and Greater Valparaíso each have populations of almost 1 million.

The country has an additional 17 cities with populations between 100,00 and 400,000.

Popular industries

The top industries in Chile are mining, manufacturing, fishing, forestry, agriculture, viticulture, communications, information technology, finance and tourism.

Education

The Times Higher Education World Rankings includes eight Chilean universities in the top 1,000 in the world.

The Legatum Prosperity Index ranks Chile’s education system 61st out of 149.

Popular entity types

The most common type of business entities in Chile are the Limited Liability Company, Private Company Limited by Shares, Public Company Limited by Shares and Corporation.

The overwhelming majority of businesses are in the form of a Limited Liability Company.

Chilean incentives for business

Chile offers a foreign tax credit to offset taxes paid abroad. If the foreign country has a DTT with Chile the credit is 35% maximum. Countries without a DTT have a 32% maximum.

The country also offer investment incentives for companies operating in the most northern and southern parts of the country. They also offer tax benefits to companies in forestry, oil and nuclear. Chile also offers a series of tax benefits to micro businesses and entrepreneurs.

Chile guarantees the repatriation of capital and does not favor national over foreign investors. The combined effective tax rate on profits and dividend distribution is 35% under the general tax regime. Foreign investors may apply for VAT and customs duty stability, in some cases.

The country also offer several export incentives. These include reimbursement of taxes paid on the importation or acquisitions of goods required for the export activity and zero VAT.

Chile has free trade agreements with Australia, Canada, Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua, China, Colombia, Iceland, the European Union, Hong Kong, Japan, Malaysia, Mexico, Brunei, New Zealand, Singapore, Panama, Peru, Republic of South Korea, Thailand, Turkey, the United States and Vietnam. All agreements provide reduced or no customs duties.

History & Features

 

Main cities for business

Santiago is the financial and business center of the country.

Popular historical & tourist attractions

The country of Chile offers many unique cultural and natural features. It has six UNESCO World Heritages Sites, including Rapa Nui National Park, better known as Easter Island.

Easter Island lies 2,300 miles off the coast of Chile. It was first settled by Rapa Nui peoples around 900 years ago. Their culture created monumental sculpture and architecture called moai and ahu. Between the 10th and 16th century, they erected 300 ahu (stands) and almost 1,000 moai (stone heads). Scientists still speculate if these served a cultural or religious purpose.

Another UNESCO site is the historic quarter of the seaport city of Valparaíso. It is an outstanding example of industrial heritage during the late 19th and early 20th. Valparaiso was the first and most important merchant seaport on the Pacific coast, because it linked Atlantic and Pacific sea routes via the Strait of Magellan.

Chile is also blessed with an abundance of national parks. Torres Del Paine National Park’s landscape includes the transition from the Patagonia steppe to the sub-polar forests of the north. Tall granite peaks dominate the view and the area is favored by hikers.

Another area of outstanding natural beauty is Valle de la Luna and the Atacama Desert. Valle de la Luna, or Valley of the Moon, is near the Bolivian border and covered in eerie craters, jagged peaks and dry, salty lake beds created by erosion.

The Atacama Desert features caverns. Some have early pictographs, while well-preserved mummies were found in others. The Laguna Cejar sinkhole also sits on the salt flats of the Atacama Desert. The salt concentration rivals that of the Dead Sea, but the waters are brilliant turquoise.

Santiago is the country’s cultural center. It was founded in 1540 and includes several noteworthy buildings as well as cultural offerings. The Centro Cultural Palacio La Moneda, Palacio de la Moneda, and the Chilean National Museum of Fine Arts are most popular and the Museum of Pre-Columbian Art.

The city also has an aerial tramway to the top of San Cristóbal Hill. The summit offers stunning views, an observatory and amphitheater and a 22-meter-tall statue of the Virgin Mary. Santiago also has a massive metropolitan park and botanical gardens, the Chilean National Zoo and a funicular railway.

History

Indigenous peoples lived in the area for millennia before the Incas and then Spanish arrived in the 15th century.

The Spanish established Santiago in 1540, but the indigenous peoples rebelled in 1553. They retook the area, except for a few settlements. The Spaniards regained control, but tensions remained high between the two parties for centuries.

Nonetheless, the population grew from 100,000 people in the 17th century to almost 500,000 by the end of the 18th century. Most inhabitants were of mixed Spanish and indigenous descent, or mestizo.

During the 19th century, Napoleon occupied Spain, deposed the king, and put his brother on the throne. Chile was part of the Spanish empire, but their governor had died that same year and the crown had not appointed a new one. Instead, officials formed the Government Assembly of the Kingdom of Chile in 1810, considered by many as the first step towards Chilean independence.

Peru remained loyal to Spain and captured Santiago in 1814. That same year, the French were defeated in Spain and the Spanish king returned to the throne. In an attempt to regain his hold on Chile, he introduced a repressive regime which further alienated Chileans. An army or royalists defeated the Spanish in 1817 and Chile declared its independence in 1818.

However, Chile was troubled by political instability until 1829, when the Conservatives assumed power under an authoritarian regime. They introduced a new constitution in 1833 and Chile enjoyed a long period of stability and growth.

Starting in 1873, Chile’s economy deteriorated and the country suffered from a recession. War erupted between Chile and Peru/Bolivia in 1879 over territory and export taxes imposed on Chilean nitrate companies operating in Bolivia.

The Chileans defeated Peru and the war with them ended in 1883. It continued for another year with Bolivia, but Chile was once again victorious. Chile gained substantial territory in Peru and Bolivia.

During the 19th century, Chile prospered due to nitrate exports, a necessary ingredient in fertilizer and explosives. The country held 80 percent of the world’s reserves. During World War I, Chile’s nitrate industry collapsed. Germany had developed synthetic nitrogen, ending Chile’s monopoly of world nitrates. This led to civil unrest.

In 1924, the military intervened to quell this unrest. However, by 1930 the entire world was in the midst of the Great Depression. Chile’s economy collapsed which led to more political instability, more unrest, and labor strikes.

In 1932, a previous president regained power which led to greater stability, rapid urbanization and state-led partial industrialization. Copper replaced nitrates as the country’s main source of wealth.

During the sixties, the president introduced some social reforms, but they were not enough to satisfy Chileans who lived with poverty and unemployment.

Agriculture remained stagnant, despite repeated reforms in the 1970s that depleted government reserves. Copper prices fell, government expenditures and inflation rose, and the country experienced food shortages. A strike in 1972 brought the country to a halt. In 1973, a coup led to a brutal military dictatorship.

The new leader curbed inflation, unemployment fell and the economy expanded from 1977 to 1980 with high growth rates. However, the boom ended in the economic crises of 1982. It devastated all Latin American countries, but Chile was affected the most with a 14% GDP decline and severe socio-economic damage.

The 1988, Chile held a referendum to determine whether their de facto military leader should extend his rule for another eight years. The “No” side won, ending 16 ½ years under military rule. Presidential and parliamentary elections were held in 1990 and since that time the country has enjoyed rapid economic growth.

Today, the country operates under a representative democratic republic. They have a market-oriented economy.

Other relevant facts

According to the 2002 census, the majority of Chileans identify as European and Mestizo (95.4%). Minor ethnic groups include Mapuche (4%) and other indigenous peoples (0.6%).

According to a 2018 Plaza Publica Cadem survey, most Chileans are Catholic (54%), followed by Protestant or Evangelical (14%) and other or no religion (7%).

Additional Information for Business

According to Forbes’ 2019 Best Countries for Business, Chile is the 33rd best country in the world for conducting business.

The 2019 Index of Economic Freedom rates Chile 18th globally and states, “Chile’s openness to global trade and investment and its transparent regulatory environment and strong rule of law continue to provide a solid basis for economic dynamism.”

World Bank’s “Doing Business” rankings rate Chile 59th for ease of doing business in the world.

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