On January 1 of this year, the agreement to avoid double taxation (CDT) between Chile and the United States came into force. Below are some relevant aspects:    

1. Scope of application (Article 1) 

The agreement will apply to the income tax and wealth tax payable by each of the Contracting States. 

2. Elimination of double taxation. (Article 23).     

According to the CDT, the United States will allow its residents or citizens to deduct the income tax paid or accrued in Chile. Likewise, a resident of Chile who, in accordance with the provisions of the Agreement, obtains income that may be subject to tax in the United States, may deduct it from his or her income tax.  

3. Business Profits Tax. (Article 7) .  

Under the CDT, the business profits of a company of a Contracting State may only be taxed in that State, unless the company carries on its business in the other Contracting State through a permanent establishment.  

4. Tax on dividends. (Article 10) .   

Under the CDT, dividends paid by a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.  

However, such dividends may be taxed in the Contracting State of which the company paying them is a resident and according to the laws thereof. In the latter case, as a general rule, the tax required will be 15% and, in those cases in which the beneficiary has 10% of the voting shares of the company, the tax required will be 5%. 

5. Interest tax . ( Article 11 ).   

Under the CDT, interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 

However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State. If the beneficial owner is a resident of the other Contracting State, the tax required may not exceed 10% (the CDT establishes a transition period of 5 years in which a tax of 15% must be paid). In addition, there are certain exceptional cases in which the rate will be 4% ( banks, insurance companies, financial institutions, etc. )

6. Royalty tax. (Article 12) .   

Under the CDT, royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 

However, these royalties may also be taxed in the Contracting State in which they arise and in accordance with the laws of that State. If the beneficial owner of the royalties is a resident of the other Contracting State, the tax may not exceed 2% or 10% as the case may be.

7. Capital gains tax. (Article 13) .   

Under the CDT, gains derived by a resident of a Contracting State from the alienation of real estate situated in the other Contracting State may be taxed in that other State.  

In the case of gains arising from the alienation of shares or other rights or interests representing the capital of a company that is a resident of the other Contracting State, they may be taxed in that other Contracting State, but the tax so charged may not exceed 16% of the profit amount. 

8. Tax on independent personal services. (Article 14) 

Under the CDT, income derived by a resident of a Contracting State from professional services or other activities of an independent nature may only be taxed in that State.  

Exceptionally, the income may also be taxed in the other Contracting State in the following cases:  

a) if the resident of a Contracting State has in the other Contracting State a fixed base that is regularly available for the performance of his activities.

b) if the resident of a Contracting State remains in the other Contracting State for a period or periods which together amount to or exceed 183 days, in any twelve-month period.