Loan from abroad & taxes
When a foreign company wants to grant a loan to her foreign branch in Chile there are a couple of things she has to have in mind.
First, a loan agreement has to be informed to the Chilean Central Bank when the money arrives. It is important to inform the loan to avoid to be seen as a covered distribution of profit when they start to service the loan.
Second, loans are subject to the “impuesto de timbres y estampillas” (stamp tax). In general, the stamp tax is a tax levied upon credit transactions contained in documents. Usually, the stamp tax is levied when the loan agreement is signed. As an exemption, credits coming from abroad do not need to be contained in a document to be levied by such tax. In these cases, where no document states the credits agreements that are the source of the money coming from abroad, the tax is levied when the loan enters the country or is registered in the account books in Chile. In case the loan agreement refers to a credit being awarded abroad, then the stamp tax is levied when the money arrives in Chile. The amount of the tax is o,6% of the credit. So, this tax is levied only once, either when the loan agreement is signed or when the money arrives.
Third, when the service of the loan starts, the interest is subject to a 35% tax rate for “impuesto adicional”. The Income tax law establishes a rate of 35% on interests and a special rate of 4% on loans given by a credit institution or bank when certain requirements are fulfilled. Therefore, the interest to be paid totally or partially in bank accounts of persons or entities without domicile or residence in Chile, are burden by Additional tax with a rate of 35% and such amount should be retained in Chile. There are some countries, that have double taxation agreements with Chile, like Spain and in those cases, the tax rate varies from 5 to 15%.