Opening a business in Chile: what do I need to know?

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Re: Opening a business in Chile: what do I need to know?

Post by chilly » Mon Feb 24, 2020 1:15 am

Are you officially a non-resident with Estonia? You may want to make sure you make a clean official break so that Estonia doesn’t go after you after 5 years of paying taxes to Chile. That would probably be an Estonia tax guy. Essentially, avoid double taxation from both sides.

How to most easily write off part of your residence/car as a business expense? If your wife works as an employee, is that helpful?

I would be interested in which accounting software you end up using. See what they suggest.

Since you will there anyway, you may want to discuss intellectual property, copyright and trademarks for your materials and program. What are reasonably effective contract terms so people don’t duplicate and distribute your stuff. How can you get the rights to tape your seminars, which includes your customers employees, and use them in your future marketing?

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Re: Opening a business in Chile: what do I need to know?

Post by admin » Mon Feb 24, 2020 8:19 am

I would never suggest to a client that they "try to stay under the tax radar". It implies doing something shady.

That just draws attention at some point, because sooner or later someone at SII (or whatever) goes looking for those "under the radar" strategies.

What we typically recommend to our clients is keep it as simple as possible and transparent as possible, for as long as possible. which , ironically, actually makes us a lot less money in the short term, but tends to keep our clients and their money around in the long run (e.g. they are not in jail or SII has not siezed their assets, and hopefully they make money to spend on us later).

thus, when inevitably you do get audited, there is no where for the auditors to go looking. There is not some complex, off-shore, network of shell companies, bla, bla causing you to make unnecessary mistakes with your tax and regulatory paperwork. It also tends to run the auditors off, just for lack of interest in what you are doing.

Basically, rather than "staying under the radar" it is more of a "camouflage" by hiding in plane sight strategy. Camo is the oldest and most successful defensive strategy on the planet. Don't attract the attention of an auditor with all sorts of flashy corporate structures, and strange transactions.

once your buisness is making piles of money, and your tax bracket starts creeping up, then it might be time to start looking in to more complex tax structures; but, don't go setting-up structures like wall mart or Microsoft, unless you are making the money like Wall mart or Microsoft.

so, if your lawyer and accountant are proposing some particular corporate structure, start asking hard questions about the benefits vs. the costs (both in tax terms and maintenance terms). paying say 10 million pesos a year in maintenance costs for some complex corporate scheme, makes no sense to save 1 million pesos in tax. likewise, spending 50% of your time doing tax paperwork makes no sense either. In a new buisness venture, there are more important things to invest your time in.

In short, if you are not criminal, don't act like one. If you don't have a massive tsunami of cash rolling in to worry about taxes, then why pay to a pile of money to act like you do.
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Re: Opening a business in Chile: what do I need to know?

Post by fraggle092 » Mon Feb 24, 2020 9:32 am

By "under the radar" I was not implying or condoning illegal activity or even tax evasion. But for small-scale, outside-the-norm activities, the tax people are not even interested, in fact its sometimes hard to get a straight answer from them, I have tried in the past.

We have been audited by the SII on our Chilean Peso transactions four times over the years, but never on our (admittedly tiny) IVA-exempt Dollar transactions. Their focus is mainly on IVA evasion and avoidance.

For businesses trying to obtain any sort of Chilean government work though, a tax-registered company with a clean tax record is a must, as is a good history of labour relations with the Inspeccion de Trabajo. They do check, or ask for certificates. Been there, done all that.

Even to get a company bank account, one of the requirements they hit you with is your last three Formulario 29s to prove I guess, that at least the SII are happy that you are running a viable business.
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