Prominent multinational companies such as Microsoft, Google, Huawei, AWS and Oracle have placed their trust in Chile by installing technological infrastructure in the country.
Over the past few years, Chile has become a Latin American digital hub. Prominent multinational companies such as Microsoft, Google, Huawei, AWS and Oracle have opted for Chile when installing their data centers or regional clouds.
The reasons for this are multiple, but two stand out above all others. The first is Chile’s connectivity, with its fiber optic network currently undergoing expansion and a 5G network to be put out to tender this year. The second is its excellent potential for exporting technological services, thanks to its integration with the rest of the world, through free trade and double taxation avoidance agreements, the availability of advanced human capital and time zones that are similar to some of the larger markets, such as the east coast of the United States.
The foreign global services companies that choose Chile for installing their projects are presented with a series of incentives that they can opt for, which include tax credits and benefits, among others. A description of the four most significant benefits is presented below.
Income from service exports, including data storage and processing, can benefit from VAT exemption, duty drawback and rebates for other customs charges paid on raw materials and other items, access to credit mechanisms for taxes paid abroad and additional tax exemption for engineering works or technical services.
Investment in training
The National Service of Training and Employment (SENCE) offers deductions on annual tax collection for costs incurred for previously declared training activities approved by the institution.
Investment in Research and Development (R&D)
The R&D Law provides a tax incentive for investment in research and development in Chile. For example, it provides tax credit equivalent to 35% on first category income tax for R&D activities certified by Chile’s Economic Development Agency, CORFO.
Capital goods imported for technological research and development projects, with an investment above US$5 million, benefit from import duty and VAT exemption.
To find out more about the market and opportunities in the Global Services sector, InvestChile, the country’s Foreign Investment Promotion Agency, has just launched its new Global Services e-Book, a tool that has been created to provide all the information needed by foreign businesses interested in investing in this sector in Chile.
The report provides a full description of Chile’s business climate and a profile of the country’s technological sector, incentives for investment, success stories of foreign companies that have established themselves in Chile, and much more.
To learn more about digital infrastructure investments in Chile, see the following article.