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Promotion of R&D: Chile looks to the future and leads innovation in Latin America

Camila Comas - July,13,2018

For ten years, Chile has had legislation that promotes research and development by companies, thereby facilitating their growth and the implementation of new projects. In the 2018 Global Innovation Index, Chile ranks in top place in Latin America.

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In Chile, innovation is law. For ten years, it has been using an effective promotion tool: a tax credit whose purpose to improve the ability of local and overseas companies to compete by reducing the cost of investment in Research and Development (R&D) by up to 50%.

Since it came into force, this law has permitted the implementation of more than 900 projects, with a government contribution in the form of tax credits of over US$350 million.

An active and versatile law

This incentive seeks to support innovation in the development of processes or products that involves some degree of uncertainty, calls for the generation of new knowledge or closes technological gaps.

The R&D Law is a flexible tool for which companies of all types are eligible. It can be accessed easily through an online form. No competitive process is involved and there is no limit on the number of projects or companies that can use the benefit: the project must simply meet the characteristics stipulated in the law. As a result, this mechanism fosters the permanent integration of R&D into companies’ usual practices.

If a company does not have internal R&D capabilities nor its own R&D area or if these activities do not form part of its core business, the law allows it to outsource this work or, in other words, to hire a third party to implement the project. Indeed, the government’s Economic Development Agency (CORFO), which is responsible for certifying R&D projects, has a Register of R&D Centers that have been validated and specialize in the outsourcing of these operations, thereby allowing investors to tap into the R&D capabilities that already exist in the country.

Thanks to its versatility, the law has been successful in fostering R&D by companies, helping them to develop an internal culture of permanent innovation. As a result, many currently submit complete portfolios of projects, contributing to more and better training of their personnel, improving installed capacities and simultaneously developing different lines of work. In this way, the companies that use this benefit have become true technological points of reference within their industries.

Global Innovation Index (GII): Chile leads Latin America

The INSEAD Business School, Cornell University and the World Intellectual Property Organization (WIPO), a UN agency, have recently published the results of the latest Global Innovation Index (GII), in which Chile took top place in Latin America, followed by Costa Rica and Mexico.

In the case of Chile, which ranked 47th globally out of the 126 countries evaluated, the study found that it stands out on regulatory quality, enrolment in higher education, domestic credit to the private sector, firms offering formal training, new business density and foreign direct investment inflows and outflows.

Key provisions of the R&D Law

  • In order to be eligible for the tax credit, projects must involve an investment of at least around US$7,000.
  • This can include the hiring of qualified personnel, the training of existing employees and the acquisition of the instruments and equipment required for applied research and experimental development activities.
  • Other items related to protection of the project’s results, such as the patenting of inventions and industrial design and drawings, the registering copyright on computing programs and the protection of rights on new vegetable varieties, may also be considered.
  • All companies installed in Chile, regardless of their origin, economic sector or field of application, are eligible to use this tool.

Let’s make your project a reality

At InvestChile, we can advise you and help you implement your project. If your overseas company is interested in evaluating R&D activities in Chile, schedule a call or meeting with us. We offer free advice on applying for the benefits and grants available from the Chilean government.

Do you want to tell us about your project? Contact us.

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Topics: Articles- R&D

Camila Comas

Camila Comas

Investment Promotion Executive - Food Industry Specialist / Biochemical Engineer with a Master's degree in Industrial Engineering and experience in the commercial area of Food and Nutraceutical Industry. Co-author of "Strategy for the Development of the Functional Ingredients Industry in Chile" (Foundation for Agrarian Innovation), basic document for the new public-private food policies in Chile. / ccomas@investchile.gob.cl

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