Chile is a South American country sharing borders with Peru, Bolivia, and Argentina. Geographically, Chile has a diverse landscape including the Andes Mountains, the Atacama Desert, lakes, rivers, and a long coastline with the Pacific Ocean.
Chile has a population of around 19 million people and the official language of the country is Spanish. The country has a long and interesting history dating back to the time of the indigenous population thousands of years prior to the Spanish invasion in the 16th century.
It’s a well-known fact that Chile is the producer of the worlds’ finest wine, in fact, the country’s vineyards are the best in the world. Chile gained independence from the Spanish occupation in 1818, and since then it has enjoyed stable democratic rule in the country.
Types of companies permissible in Chile
The overall environment in Chile is encouraging for businessmen and companies, foreign and local. Stable policies, transparent legal and bureaucratic systems, low corruption rates, and access to skilled and hardworking labor play a pivotal role in the economic progress of the country.
There are a number of options investors can choose from in terms of company formation, a few are discussed here:
| S# | Type of company | Local name | Min.paid-up capital required |
| 1. | Sole proprietorship | Empresa Individual | No paid-up capital required |
| 2. | Limited Liability Company | Sociedad de Responsabilidad Limitada (SR) | No paid-up capital required |
| 3. | Corporation | Sociedad Anónima (SA) | No paid-up capital required |
| 4. | Partnership(s) | Sociedad en Nombre Colectivo | Sociedad en Comandita Simple | No paid-up capital required |
Note that though there is no minimum paid-up capital requirement, companies must have enough capital to carry out their business activities effectively and comply with legal and regulatory requirements.
Sole Proprietorship
A sole proprietary business is owned and managed by a single person. The owner may delegate the operational powers to a subordinate, but the actual decision-making of the business remains with the owner. Similarly, the owner is personally responsible to compensate for the losses, debts, and any other liabilities arising from the business.
Partnership
A partnership company requires two or more natural persons to form. In Chile, the partnership can be a general partnership or a limited partnership. General partners assume liabilities in a personal capacity while limited partners are only responsible to the extent of their share in the business.
Limited Liability Company
An LLC is more complex than the previous two as it requires to comply with a number of regulations and structural requirements by the state. An LLC offers the owners protection against debts and liabilities as in such events the company is responsible to compensate from its assets, and not the owners.
Corporation
A corporation in Chile is similar format as an LLC. However, a corporation is subject to more regulations and even more complex structural requirements. Apart from the formation, a corporation is also bound to hold members’ meetings annually, or when demanded.
Cost incurred during the registration process in Chile
The costs involved during the registration and incorporation process depend on the size, location, and the nature of business.
The most likely costs to be incurred are:
Legal and professional fees
This includes the fees charged by lawyers, accountants, and other professionals involved in the registration process. The cost will depend on the complexity of the company’s structure and the level of support required.
Notary and registration fees
These fees are charged for the preparation of legal documents and the registration of the company with the Register of Companies and Corporations. The fees vary depending on the type of company and the number of shareholders.
Capital deposit
A deposit of at least 50% of the authorized capital must be made in a Chilean bank, which can incur additional costs such as bank fees and currency exchange fees.
Stamp duties and taxes
There may be stamp duties and taxes payable on the formation of a company, such as the Impuesto de Timbres y Estampillas (Stamp Duty Tax) and the Impuesto a la Renta (Income Tax).
Overall, the cost of registering a company in Chile can range from a few hundred dollars to several thousand dollars, depending on the type of company and the range of services required.
Cost of doing business in Chile
The cost of doing business depends on factors such as the size of the company, its location, etc. Here are a few expenses that companies must be prepared to incur while budgeting.
Labor costs
Chile has a highly educated workforce, and labor costs are generally lower than in other developed countries. The minimum wage in Chile is currently US$420 per month approximately, but skilled workers may earn considerably more.
Rent and utilities
The cost of renting commercial space in Chile varies depending on the location and size of the property. Utilities such as electricity, water, and internet are generally reliable and affordable.
Taxes
Chile has a relatively low tax rate compared to other Latin American countries, with a corporate tax rate of 25%. However, businesses may also be subject to other taxes such as VAT and customs duties.
Transportation and logistics
Chile is a long and narrow country, and transportation costs can be high, especially for businesses operating in remote areas. Logistics costs can also be impacted by the country’s mountainous terrain and infrastructure limitations.
Regulatory compliance
Businesses must comply with a range of legal and regulatory requirements in Chile, which can involve additional costs such as legal fees and compliance costs.
Benefits of registering a company in Chile
Investors and companies who wish to establish their presence and reach the Latin American markets can benefit by incorporating a company in Chile.
The major benefits are:
Free Trade Agreements
Chile has over 30 free trade agreements with other countries, providing access to a market of over 4 billion people.
Economic Stability
Chile has a stable economy with low inflation rates and a well-managed fiscal policy. It is also one of the few countries in Latin America with an investment-grade credit rating.
Strategic Location
Chile’s location provides easy access to the markets of South America and the Pacific Rim, making it an ideal hub for doing business in the region.
Skilled Workforce
Chile has a highly educated workforce, with a literacy rate of over 96% and a strong emphasis on technical education.
Supportive Government
The Chilean government actively encourages foreign investment, offering tax incentives and other forms of support for companies establishing operations in the country.
