The Department of Treasure American announced this Tuesday the entry into force of a comprehensive income tax treaty between USA and Chili which, among other things, will reduce tax barriers to cross-border investments between both countries.
Said Chilean fiscal pact, which is the first new bilateral treaty signed by the United States that comes into force in more than 10 years, was approved by a “overwhelming majority” in the Senate on June 22 and was ratified by the US president, Joe Biden, in December, according to a statement from the Treasury Department.
Provisions of the Chilean treaty include a reduction in the home country withholding tax on certain dividend payments and a prohibition on home country taxation of commercial profits of a company that does not have “permanent establishment”.
The document, which is the second comprehensive bilateral tax treaty of the United States in force with a South American country, also includes a comprehensive provision that allows the complete exchange of information between the tax authorities of the two countries.
At the same time, the agreement between the US and Chile aims to avoid duplication in the payment of taxes and prevent tax evasion of income and wealth taxes.
For taxes withheld at source, the treaty will take effect for amounts paid or credited on or after February 1, 2024 and for all other taxes on or after January 1, 2024.
Source: Gestion
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