Chile Payroll Information – Deel Global Payroll

Updated on: 2025/08/04 14:26 (UTC)

Overview

Chile, officially the Republic of Chile, is a constitutional republic that is primarily located in southwest South America. The countries that border Chile are Peru to the north, Bolivia to the northeast, and Argentina to the east. The southwestern and southern parts of Chile contain many islands that are close to mainland South America, with the Strait of Magellan among the bodies of water between the part of Chile on mainland South America and some of the country’s islands that are relatively close to the mainland and that because of their proximity are considered within the overall main part of the country. The overall main part of Chile is bordered to the west by the Pacific Ocean. Chile is divided into 16 first-order administrative divisions known as regions (regiones), which are in turn divided into a total of 56 provinces (provincias).

From north to south, Chile’s 16 regions are Arica and Parinacota (Arica y Parinacota), Tarapacá, Antofagasta, Atacama, Coquimbo, Valparaíso, Santiago Metropolitan Region (Región Metropolitana de Santiago), O’Higgins (shortened from Libertador General Bernardo O’Higgins), Maule, Ñuble, Biobío (Bíobío, Biobio, Bio Bío, Bio-Bio, many similar variations), Araucanía, Los Ríos, Los Lagos, Aysén (shortened from Aysén del General Carlos Ibáñez del Campo), and Magallanes (Magallanes and Chilean Antarctica Region, Región de Magallanes y de la Antártica Chilena).

Easter Island (Rapa Nui, Isla de Pascua), which is governed by Chile as a province and commune considered part of the Valparaíso Region, is about 3,500 kilometers to the west of mainland Chile in the Pacific Ocean. The Juan Fernández Islands, which are considered a commune of Valparaíso Province in the Valparaíso Region, are located in the Pacific Ocean to the west of mainland Chile and at their closest point to mainland Chile are about 650 kilometers afar.

Chile’s currency is the Chilean peso. Even though the Chilean peso is the currency of Chile, many contracts and some components of Chile’s tax system are denoted in units other than the Chilean peso. Some of Chile’s tax aspects are rendered as amounts of account units (unidades de fomento, abbreviated as UF), also known as development units. The UF is adjusted in accordance with changes in the applicable consumer price index. Some components of Chile’s tax system are configured in terms of monthly tax units (MTU), known in Spanish as unidades tributarias mensuales (UTM), with the value of one monthly tax unit in equivalent Chilean pesos subject to inflation. The Central Bank of Chile (Banco Central de Chile) publishes valuations of the UF and MTU in Chilean pesos, with UF valuations subject to change on a daily basis and MTU valuations subject to change on a monthly basis.

Employers in Chile are responsible for employment-related taxes such as income tax withholding and social insurance payments and withholding, which includes pension-related contributions, unemployment taxes, and other obligations, such as health insurance, although many of these funds have either been converted into mandatory private funds, or to private fund alternatives. Employers also must uphold labor-related requirements under Chile’s labor law.

Foreign workers are granted the same rights as Chilean citizens and while generally covered by the same workplace laws, taxation for foreigners can differ from resident taxation.

Chilean residents working in the United States are covered by U.S. tax law with possible social tax treaty and work status exclusions applying. Work within the U.S. states and territories is covered by various labor laws.

CURRENCY DETAILS

The currency of Chile is the Chilean peso (CLP$), also known in Chile simply as the peso. The internationally recognized three-letter currency code for the Chilean peso is CLP, which is similar to the currency’s commonly used currency symbol CLP$. The plural form of Chilean peso is Chilean pesos.

In Chile, amounts of Chilean pesos are commonly written using the general dollar currency symbol $, which in addition to being used for all dollar currencies is used for some, but not all peso currencies. When an amount of Chilean pesos is written in Spanish, the most prevalent language in Chile, using the currency symbol $, the symbol precedes the numerical value with no space between the numerical value and symbol.

When an amount of Chilean pesos is written using the currency symbol CLP$, which is commonly done in Spanish and which is the predominant currency symbol used in English for the Chilean peso, the symbol precedes the numerical value, with a space between the numerical value and symbol if written in Spanish and no space between the numerical value and symbol if written in English.

When an amount of Chilean pesos is written using the currency symbol Ch$ or one of its variants (Ch $, CH$, CH $, $Ch, and $CH), and when an amount of Chilean pesos is written using the currency symbol Cl$ or one of its variants (Cl $, CL$, CL $, $Cl, and $CL), the symbol precedes the numerical value with no space between the numerical value and symbol.

One hundredth ( ¹ ⁄ ₁₀₀ ) of a Chilean peso is referred to as a centavo, with the plural form of centavos.

When amounts of Chilean pesos are written in Spanish, the comma that in English separates the thousands place from the hundreds place instead is rendered as a dot (.), and the dot that in English separates the ones place from the tenths place instead is rendered as a comma.

TAXES

Chile’s national government enacts laws relating to income taxes. In addition, employers must implement wage withholding and separate contributions under Chile’s Social Security system, which consists of a pension fund, an unemployment insurance fund, a workers’ compensation fund, a health insurance, and a disability and survival fund, all of which are either being converted to private mandates or have private alternatives.

There are no local employment-related taxes.

Tax amounts reported below are in Chilean pesos, monthly tax units, and account units.

The tax year is the calendar year, from Jan. 1 to Dec. 31.

Income tax collection in Chile is administered by the country’s Internal Revenue Service (Servicio de Impuestos Internos, abbreviated as SII).

Coronavirus (Covid-19) Guidance: From Aug. 18 to Oct. 18, 2021, employers, except for those in the financial and insurance industries, with less than 50 employees on March 31, 2021, may apply to the Internal Revenue Service for a one-time bonus equal to the amount of pension contributions accrued in January, February, or March 2021, whichever month is highest. The employer must have also suspended at least one employee’s contract during the period from April 6, 2020, to March 31, 2021. The bonus must be used to pay employees’ social taxes.

Income Taxes

Tax on salaries and payments to employees in Chile is referred to by the country’s Internal Revenue Service as Second Category Tax (SCT), with this category known in Spanish as Impuesto Unico de Segunda Categoría. Tax on income acquired by nonresidents is referred to by the Chile Internal Revenue Service as Additional Tax (AT), with this category known in Spanish as Impuesto Adicional.

Income taxes in Chile also include First Category Tax (FCT), which is tax on business income and is known in Spanish as Impuesto de Primer Categoría, and Complementary Global Tax, which is tax on other personal income, such as capital gains, and is known in Spanish as Impuesto Global Complementario.

Coverage: All employers must withhold tax on all employees. All resident or domiciled taxpayers are subject to taxes on their total income on a worldwide basis, with the sole exception of foreign individuals who only pay taxes on Chilean source income for their first three years in the country. This period can be extended.

Employees: An employee is defined as anyone working in a subordinate role, where their employer is determining the times and ways to perform the work or services in question.

Rates and Thresholds: Income tax rates are levied on a progressive scale for residents, with rates ranging from zero to 40%.

Each of Chile’s personal income brackets contains a range of income based on the monthly tax unit (MTU), known in Spanish as a unidad tributaria mensual (UTM) and also known in English as a monthly taxable unit. The equivalent worth of one monthly tax unit in Chilean pesos is subject to monthly adjustment, with the valuations available from the Central Bank of Chile. To access the most recently available monthly tax unit amount and the historical catalogue of monthly tax unit amounts on the linked webpage included in the previous sentence, click the Spanish phrase Ver serie (View series) for the unidad tributaria mensual (UTM) entry.

Effective since Jan. 1, 2020, as per Law No. 21,210, which was published Feb. 24, 2020, but with provisions retroactively applicable Jan. 1, 2020, Chile’s personal income tax rates for employment income paid to residents and minimum and maximum amounts of income for each tax bracket are as follows:

Range of Taxable Income in Monthly Tax Units (MTU)	Income Tax Rate
Up to 13.5 MTU	Zero
More than 13.5 MTU and up to 30 MTU	4%
More than 30 MTU and up to 50 MTU	8%
More than 50 MTU and up to 70 MTU	13.5%
More than 70 MTU and up to 90 MTU	23%
More than 90 MTU and up to 120 MTU	30.4%
More than 120 MTU and up to 310 MTU	35%
More than 310 MTU	40%

Effective until Dec. 31, 2019, Chile’s personal income tax rates for employment income paid to residents and minimum and maximum amounts of income for each tax bracket were as follows:

Range of Taxable Income in Monthly Tax Units (MTU)	Income Tax Rate
Up to 13.5 MTU	Zero
More than 13.5 MTU and up to 30 MTU	4%
More than 30 MTU and up to 50 MTU	8%
More than 50 MTU and up to 70 MTU	13.5%
More than 70 MTU and up to 90 MTU	23%
More than 90 MTU and up to 120 MTU	30.4%
More than 120 MTU	35%

Income tax brackets expressed in Chilean pesos, instead of MTU, are available from the Internal Revenue Service.

The applicable MTU values for the most recent 24 months for which data are available are as follows:

Effective for December 2021, one MTU is equivalent to CLP$54,171;
Effective for November 2021, one MTU is equivalent to CLP$53,476;
Effective for October 2021, one MTU is equivalent to CLP$52,842;
Effective for September 2021, one MTU is equivalent to CLP$52,631;
Effective for August 2021, one MTU is equivalent to CLP$52,213;
Effective for July 2021, one MTU is equivalent to CLP$52,161;
Effective for June 2021, one MTU is equivalent to CLP$52,005;
Effective for May 2021, one MTU was equivalent to CLP$51,798;
Effective for April 2021, one MTU was equivalent to CLP$51,592;
Effective for March 2021, one MTU was equivalent to CLP$51,489;
Effective for February 2021, one MTU was equivalent to CLP$51,131;
Effective for January 2021, one MTU was equivalent to CLP$50,978;
Effective for December 2020, one MTU was equivalent to CLP$51,029;
Effective for November 2020, one MTU was equivalent to CLP$50,674;
Effective for October 2020, one MTU was equivalent to CLP$50,372;
Effective for September 2020, one MTU was equivalent to CLP$50,322;
Effective for August 2020, one MTU was equivalent to CLP$50,272;
Effective for July 2020, one MTU was equivalent to CLP$50,322;
Effective for June 2020, unchanged from May 2020, one MTU was equivalent to CLP$50,372;
Effective for April 2020, one MTU was equivalent to CLP$50,221;
Effective for March 2020, one MTU was equivalent to CLP$50,021;
Effective for February 2020, one MTU was equivalent to CLP$49,723;
Effective for January 2020, one MTU was equivalent to CLP$49,673; and
Effective for December 2019, one MTU was equivalent to CLP$49,623.

Previous values are available from the Central Bank of Chile.

Residents of Chile’s province of Easter Island, which is about 3,500 kilometers to the west of mainland Chile, have income tax treatment that differs from that of other residents of Chile. More information regarding taxation on residents of Easter Island is available in this primer’s State/Jurisdiction Taxes section.

Chile’s general flat income tax rate for employment income paid to nonresidents is 35%.

Registration: Every legal entity who starts a business or activities that may give rise to taxable income must submit a business statement to the SII, obtain a National Identification Number (Rol Unico Tributario, abbreviated as RUT), and apply to the registry of taxpayers within two months of commencing commercial activities. This can completed online, or in person at an SII office. After submitting all necessary documents to the SII via either method, the SII will complete the registration in 10 business days.

Taxpayers must inform the SII of changes to relevant information, including change of company name, addresses, opening or closing branches, new line of business, capital increases and reductions.

In order to emit certifiable financial documents, companies must get their documents “stamped” or gain authorization to submit tax documents online. To do so, employers must file Form 3230 with the SII office assigned to their residency or apply through the SII website. This must be done after an employer has been registered in the taxpayer registry and has received a RUT.

Taxable Amounts: Income tax liability is calculated on total salary and remuneration for work, less deductions for Social Security payments. The tax is withheld and paid monthly by the employer.

Withholding Methods: Residents are normally subject to a withholding of all Second Category Income Tax and Additional Tax. Employers must withhold tax based on salary estimates for all employees and apply the applicable tax rate on a monthly basis. Tax tables are available on the SII website. The tax withheld can be used as a credit against Complementary Global Tax and, if the tax withheld is more than tax due, reimbursement can be claimed by the taxpayer.

Returns and Remittance: Most employers with more than one employee must make monthly tax payments and filings (pago provisional mensual, PPM), and file annual tax returns and payments. All filings and payments can be done on the SII website, at an authorized financial institution, or at a regional SII office. Those who do not owe any taxes in a given month or year and file paper returns must file at an SII office. Those making paper tax filings who do owe taxes in that given month or year must file at an approved financial institution.

Monthly returns and payments are due the 12th of the month after the month in which remuneration was paid.

Annual payments are due either the 30th of April, if paying online, or the 26th of April, if paying in person. If these days do not fall on business days, the due date is shifted to the next business day.

In the case of employers withholding Additional Tax from nonresident workers or workers who are not domiciled in Chile, monthly payments to the Treasury must be accompanied using Form 50. These filings should be made the month after the income was withheld. These payments can be filed on the SII website or at an SII office.

All employers must file Third Party Declarations with the SII quarterly, specifically in January, February, March, and June of each year. The Third Party Declaration contains information on salaries paid to employees. It may be filed on the SII website or using the Third Party Declaration software, available on the SII website.

Some employers may be authorized by the SII to pay their taxes in US Dollars or in Euros.

Recordkeeping: Tax records must generally be kept for a minimum of three years. Employers must also keep employee contracts on public record.

Businesses that close must inform the SII within two months. Certain documentation, such as stamped documents or invoices that are not being used, must also be brought to the SII to be destroyed.

Penalties: Late remittances will be assessed interest charges and a fine of 10% of taxes due. After five months, the fine will increase by 2% of the taxes due every month, until the fine reaches a maximum of 30% of taxes due.

Adjusted tax returns will be assessed an interest fee of 1.5% of taxes due per month.

Failure to file a tax return when no tax is due will result in a fine of between one monthly tax unit and the annualized version of that amount.

Social Taxes

Chile’s Social Security system consists of a pension fund, a disability and survival fund, a health insurance fund, an unemployment insurance fund, and a workers’ compensation fund.

The social security pension fund exists only for those who were insured in 1980 and who have not opted for the private insurance plan. Chile’s health insurance system consists of private health insurance plans from health insurance institutions (Instituciones de Salud Previsional, abbreviated as ISAPREs) and the national health insurance program known as the National Health Fund (Fondo Nacional de Salud, abbreviated as FONASA). The workers’ compensation fund consists of a national program, Security of Work Accidents and Occupational Illnesses (Seguridad de Accidentes del Trabajo y Enermedades Profesionales), operated by the Institute of Labor Security (Instituto de Seguridad Laboral, abbreviated as ISL) and private options called Benefit Societies of Employers (Mutualidad de Empleadores). Some aspects of Chile’s social insurance contribution assessment processes are overseen by the Superintendency of Pensions (Superintendencia de Pensiones, abbreviated as SP).

Chile established its current unemployment insurance program (Seguro de Cesantía) in 2002 with the enactment of Law No. 19,728 and Law No. 20,328. The program is managed by the Administrator of Unemployment Funds (Administradora de Fondos de Cesantia, abbreviated as AFC), which is a private company with a fixed-term contract to manage all pension plans. The program consists of two funds: an individual fund for each worker and a collective fund.

Some components of Chile’s social tax system involve taxation based on applicable multiples of one account unit (unidad de fomento, abbreviated as UF).

Coverage: All employers with one employee or more must pay FONASA, unless their employees have elected an ISAPRE. ISAPRE coverage is elaborated upon in the Compensation and Benefits section. Male employees over the age of 55 and female employees over the age of 50 are exempt from FONASA withholding as well.

All employers must make contributions to the workers’ compensation fund and withhold and remit required employee contributions to, unless employees are covered under an ISAPRE fund.

Every employee who is at least 18 years of age must be enrolled in unemployment and disability insurance. Self-employed, domestic service workers, and those hired before 2002 are exempt.

Rates and Thresholds: Employees and employers are required to contribute to multiple social programs, with assessments for some of the programs subject to maximum amounts of employment income paid to employees upon which contribution rates may be assessed. A maximum taxable amount is known in Chile as a maximum taxable limit (límite máximo imponible), or wage cap, and is rendered as an amount of account units (unidades de fomento, abbreviated as UF).

The valuation of an account unit in equivalency to Chilean pesos is available from the Central Bank of Chile and is subject to adjustment on a daily basis. The Spanish-language abbreviation of account unit, UF, is used by the Central Bank of Chile to indicate the applicable value in Chilean pesos. The generally applicable account unit to Chilean pesos valuation for determining in Chilean pesos the maximum taxable limits in effect for a month is the valuation in effect on the last day of the month.

Effective since Feb. 1, 2021, the monthly maximum taxable limit for unemployment insurance contributions is 122.6 account units and the monthly maximum taxable limit for other social insurance contributions is 81.6 account units, with the limits rounded to the nearest whole Chilean peso. Effective for January 2021, the monthly maximum taxable limit for unemployment insurance contributions is 122.7 account units and the monthly maximum taxable limit for other social insurance contributions is 81.7 account units, with the limits rounded to the nearest whole Chilean peso. Effective from Feb. 1 to Dec. 31, 2020, the monthly maximum taxable limit for unemployment insurance contributions was 120.4 account units and the monthly maximum taxable limit for other social insurance contributions was 80.2 account units, with the limits rounded to the nearest whole Chilean peso. Effective for January 2020, the monthly maximum taxable limit for unemployment insurance contributions was 120.3 account units and the monthly maximum taxable limit for other social insurance contributions was 80.2 account units, with the limits rounded to the nearest whole Chilean peso.

Determinations of each maximum taxable limit in effect for a month involve multiplying the value in Chilean pesos of one account unit as of the last day of the month by the number of account units equivalent to the limit, and rounding the result to the nearest whole Chilean peso. The applicable maximum taxable limits for the most recent 24 months for which data are available are as follows:

November 2021: Based on the Nov. 30 account unit value of CLP$30,762.80, the maximum taxable limit for unemployment insurance contributions is CLP$3,771.519, and the maximum taxable limit for other social insurance contributions is CLP$2,510.244.
October 2021: Based on the Oct. 31 account unit value of CLP$30,380.53, the maximum taxable limit for unemployment insurance contributions is CLP$3,724.653, and the maximum taxable limit for other social insurance contributions is CLP$2,479.051.
September 2021: Based on the Sept. 30 account unit value of CLP$30,088.37, the maximum taxable limit for unemployment insurance contributions is CLP$3,688,834, and the maximum taxable limit for other social insurance contributions is CLP$2,455,211.
August 2021: Based on the August 31 account unit value of CLP$29,935.08, the maximum taxable limit for unemployment insurance contributions is CLP$3,670,041, and the maximum taxable limit for other social insurance contributions is CLP$2,442,703.
July 2021: Based on the July 31 account unit value of CLP$29,757.64, the maximum taxable limit for unemployment insurance contributions is CLP$3,648,287, and the maximum taxable limit for other social insurance contributions is CLP$2,428,223.
June 2021: Based on the June 30 account unit value of CLP$29,709.83, the maximum taxable limit for unemployment insurance contributions is CLP$3,642,425, and the maximum taxable limit for other social insurance contributions is CLP$2,424,322.
May 2021: Based on the May 31 account unit value of CLP$29,613.26, the maximum taxable limit for unemployment insurance contributions is CLP$3,630,586, and the maximum taxable limit for other social insurance contributions is CLP$2,416,442.
April 2021: Based on the April 30 account unit value of CLP$29,494.13, the maximum taxable limit for unemployment insurance contributions is CLP$3,615,980, and the maximum taxable limit for other social insurance contributions is CLP$2,406,721.
March 2021: Based on the March 31 account unit value of CLP$29,394.77, the maximum taxable limit for unemployment insurance contributions is CLP$3,603,799, and the maximum taxable limit for other social insurance contributions is CLP$2,398,613.
February 2021: Based on the Feb. 28 account unit value of CLP$29,287.38, the maximum taxable limit for unemployment insurance contributions is CLP$3,590,633, and the maximum taxable limit for other social insurance contributions is CLP$2,389,850.
January 2021: Based on the Jan. 31 account unit value of CLP$29,123.74, the maximum taxable limit for unemployment insurance contributions was CLP$3,573,483, and the maximum taxable limit for other social insurance contributions was CLP$2,379,410.
December 2020: Based on the Dec. 31 account unit value of CLP$29,070.33, the maximum taxable limit for unemployment insurance contributions was CLP$3,500,068, and the maximum taxable limit for other social insurance contributions was CLP$2,331,440.
November 2020: Based on the Nov. 30 account unit value of CLP$29,030.17, the maximum taxable limit for unemployment insurance contributions was CLP$3,495,232, and the maximum taxable limit for other social insurance contributions was CLP$2,328,220.
October 2020: Based on the Oct. 31 account unit value of CLP$28,838.63, the maximum taxable limit for unemployment insurance contributions was CLP$3,472,171, and the maximum taxable limit for other social insurance contributions was CLP$2,312,858.
September 2020: Based on the Sept. 30 account unit value of CLP$28,707.85, the maximum taxable limit for unemployment insurance contributions was CLP$3,456,425, and the maximum taxable limit for other social insurance contributions was CLP$2,302,370.
August 2020: Based on the August 30 account unit value of CLP$28,679.45, the maximum taxable limit for unemployment insurance contributions was CLP$3,453,006, and the maximum taxable limit for other social insurance contributions was CLP$2,300,092.
July 2020: Based on the July 31 account unit value of CLP$28,667.44, the maximum taxable limit for unemployment insurance contributions was CLP$3,451,560, and the maximum taxable limit for other social insurance contributions was CLP$2,299,129.
June 2020: Based on the June 30 account unit value of CLP$28,696.42, the maximum taxable limit for unemployment insurance contributions was CLP$3,455,049 and the maximum taxable limit for other social insurance contributions was CLP$2,301,453.
May 2020: Based on the May 31 account unit value of CLP$28,716.52, the maximum taxable limit for unemployment insurance contributions was CLP$3,457,469 and the maximum taxable limit for other social insurance contributions was CLP$2,303,065.
April 2020: Based on the April 30 account unit value of CLP$28,690.73, the maximum taxable limit for unemployment insurance contributions was CLP$3,454,364 and the maximum taxable limit for other social insurance contributions was CLP$2,300,997.
March 2020: Based on the March 31 account unit value of CLP$28,597.46, the maximum taxable limit for unemployment insurance contributions is CLP$3,443,134 and the maximum taxable limit for other social insurance contributions was CLP$2,293,516.
February 2020: Based on the Feb. 29 account unit value of CLP$28,463.67, the maximum taxable limit for unemployment insurance contributions was CLP$3,427,026 and the maximum taxable limit for other social insurance contributions was CLP$2,282,786.
January 2020: Based on the Jan. 31 account unit value of CLP$28,338.25, the maximum taxable limit for unemployment insurance contributions was CLP$3,409,091 and the maximum taxable limit for other social insurance contributions was CLP$2,272,728.
December 2019: Based on the Dec. 31 account unit value of CLP$28,309.94, the maximum taxable limit for unemployment insurance contributions was CLP$3,366,052 and the maximum taxable limit for other social insurance contributions was CLP$2,252,147.

Social insurance contributions also are subject to a minimum monthly tax base upon which they may be assessed. If an employee’s compensation for a month was less than the minimum monthly tax base, the employee’s compensation for the month would be treated as having been the minimum monthly tax base for calculations of social insurance contributions assessed on the employee and employer. The minimum monthly tax base applicable to social insurance contribution assessments on an employee and the employer is the monthly minimum wage applicable to that employee.

Contribution rates are assessed as follows:

Pension (Pensión): Employees must contribute 10% of their earnings to the pension fund supervised by their pension fund administrator (administradora de fondos de pensiones, abbreviated as AFP), plus a commission to the pension fund administrator that is a percentage of their earnings.

The contribution rate for providing a commission to the pension fund administrator is subject to variation among Chile’s seven private pension fund administrators, which are Capital, Cuprum, Habitat, Modelo, PlanVital, ProVida, and Uno. Other private pension fund administrators may join the market.

Employees entering the pension program for the first time are automatically enrolled in the private pension fund administrator that has been designated as the administrator for new accounts by the Superintendency of Pensions, and cannot generally switch to another administrator until the superintendency designates a different administrator for new accounts. The designated administrator for new accounts may be redesignated about every two years. Employees who enter the pension program for the first time from Oct. 1, 2021, to Sept. 30, 2023, are enrolled in Modelo. Employees who enter the pension program for the first time from Oct. 1, 2019, to Sept. 30, 2021, were enrolled in Uno.

Effective starting Oct. 1, 2021, the pension-plan commission rates assessed on employees by Chile’s pension fund administrators range from 0.58% to 1.45%. Effective from Sept. 1, 2020, to Sept. 30, 2021, and from Oct. 1, 2019, to June 30, 2020, the pension-plan commission rates assessed on employees by Chile’s pension fund administrators ranged from 0.69% to 1.45%. Effective from July 1, 2020, to Aug. 31, 2020, the pension-plan commission rates assessed on employees by Chile’s pension fund administrators ranged from 0.62% to 1.45%. Effective from Aug. 1, 2018, to Sept. 30, 2019, the pension-plan commission rates assessed on employees by Chile’s pension fund administrators ranged from 0.77% to 1.45%.

Employers generally are not assessed a contribution rate for funding pension plans.

Additional pension contributions are assessed when an employee’s occupation involves qualifying hard work (trabajo pesado), in which the nature of the work is considered by the government to accelerate aging in the majority of workers who perform such work, compelling additional contributions to be assessed so that a worker’s pension fund may accumulate faster and enable the worker to retire sooner than would be achievable without the additional contributions. An employee whose occupation involves qualifying hard work, and the employer, each may be assessed an additional pension insurance contribution rate of 1% or 2%. The additional contribution also is known as an overcharge (sobrecotización).

The list of occupations recognized by the government as occupations involving qualified hard work, and the additional pension insurance contribution rates associated with these occupations, are available from the qualified jobs webpage of the Superintendency of Pensions.

Disability and Survival Insurance (Seguro de Invalidez y Sobrevivencia, abbreviated as SIS): Employers, but not employees, are assessed a contribution rate for Chile’s Disability and Survival Fund. The rate is generally subject to adjustment on July 1 of each even-numbered year.

Effective starting Oct. 1, 2021, the disability and survival insurance contribution rate for employers is 1.85%. Effective from July 1 to Sept. 30, 2021, the disability and survival insurance contribution rate for employers was 2.21%. Effective from April 1 to June 30, 2021, the disability and survival insurance contribution rate for employers was 1.94%. Effective from Jan. 1 to March 31, 2021, the disability and survival insurance contribution rate for employers was 2.3%. Effective from July 1 to Dec. 31, 2020, the disability and survival insurance contribution rate for employers was 1.99%. Effective from July 1, 2018, to June 30, 2020, the disability and survival insurance contribution rate for employers was 1.53%.

National Health Fund (Fondo Nacional de Salud, abbreviated as FONASA): Employees are assessed a FONASA contribution rate of 7% of their income. Employers are not assessed a contribution rate for funding FONASA.

Unemployment Insurance (Seguro de Cesantía): Rates assessed on an employee and the employer vary based on whether the employee is on a fixed-term contract or permanent-term contract, and the total unemployment insurance contribution rate regardless of the percentage allocations among employees and employers is 3%.

For workers on a fixed-term contract, employers must contribute the equivalent of 2.8% of employees’ taxable wages to the worker’s individual account in the AFC and 0.2% toward the Unemployment Solidarity Fund (Fondo de Cesantía Solidario). Employees are not assessed an unemployment insurance contribution rate if they are on a fixed-term contract.

For workers on an indefinite contract, employers must contribute the equivalent of 1.6% of an employee’s taxable wages to the worker’s individual account and 0.8% toward the Unemployment Solidarity Fund, and employees must contribute 0.6% of their taxable wages toward their individual account.

Regardless of the type of contract, employers and employees must only make contributions to an employee’s account for the first 11 years, or 132 months, of an employment relationship. For subsequent months, the employer is only responsible for the contribution to the Unemployment Solidarity Fund.

Work Accident and Occupational Disease Insurance (Seguro Contra Accidentes Laborales y Enfermedades Profesionales): Employers are assessed a basic contribution rate of 0.93% of remuneration paid, plus an additional rate ranging from zero to 6.8%, with the additional rate depending on the risk level assessed biannually by the ISL. Before April 2018, the basic contribution rate was 0.95%. Additionally, upon initiating commercial activities, most, but not all employers are assessed an additional contribution of up to the equivalent of 3.4% of remuneration paid depending on the economic sector of the employer. Employees are not assessed a workers’ compensation fund contribution rate.

Taxable Amounts: Social taxes are based on all salaries and wages paid to employees over that month.

Registration: Employees are responsible for their registration in either FONASA or an ISAPRE, although employers must provide employees with a signed Basic Form for the Insured.

Employers must register and notify the AFC within 10 days (13 days if done electronically) of hiring or firing workers. Additionally, employers must notify the AFC when a workers contract changes from a limited term to a permanent term contract or vice versa.

Returns and Remittance: Contribution payments must be declared and paid within the first 10 days of the month following that in which taxable wages were paid. However, if paid online, payments can be made by the 13th of the month. Payments can be made online on the PREVIRED website, at an IPS office, or at approved financial institutions.

Employers must withhold employee unemployment insurance contributions and pay them together with their contributions to the AFC every month. Payments to the AFC should be made by the 10th of each month. Payments made online may be made by the 13th of each month. Payments can be made either at one of the offices of the AFC, on the PREVIRED website, a compensation registry, or on an AFC website.

Employers must inform the Work Inspector of any serious or fatal work related accidents.

Recordkeeping: Generally, tax records should be kept for a minimum of five years.

Penalties: Employers that fail to declare or pay any of the Social Security costs will incur a fine of 0.75 account units per employee per month plus interest. All employers that fail to make payments or file returns will be barred from receiving funds from public or private institutions funded by tax revenue. Companies that do not allow FONASA to inspect their facilities fines of 0.5 to 26 times the monthly minimum wage can be charged.

For unemployment insurance, unpaid contributions are adjusted by CPI plus interest penalties. Additionally, the administration of the AFC may perform a collection of unpaid contributions. If unemployed workers are unable to receive benefits as a result of delinquent employer contributions, the employer must pay these benefits directly to the unemployed worker. Additionally, an employer that has not fulfilled its obligations may be prevented from accessing tax and training programs funded by the National Training Fund.

Other Taxes

Chile’s national government does not assess any taxes on employment income other than those covered in the Income Taxes and Social Taxes sections of this primer.

State/Jurisdiction Taxes

Residents of Chile’s province of Easter Island are not subject to income tax on income derived from employment activities performed on Easter Island. Social tax provisions applicable to employment income paid to residents of the overall main part of Chile also are applicable to employment income paid to Easter Islanders.

COMPENSATION AND BENEFITS

In Chile, compensation and benefits are regulated by the labor code, which is administered by the Ministry of Labor and Social Welfare. Regulations relate to labor contracts, worker protections, labor unionization, collective bargaining, and other labor legislation. These regulations include minimum wage, overtime, hours worked, holidays and leave, wage payment, bonuses and special benefits, termination pay and workers’ compensation requirements.

In addition, Chile has instituted a mandatory private pension accounts system. Under the system, employers must make regular contributions to approved pension fund administrators (AFPs). Also, Chile requires all employers to contribute to an approved unemployment insurance program (AFC). Lastly, all employers must contribute to an approved private health insurance plans (ISAPREs), unless their employees are covered under the National Health Fund (FONASA).

The Ministry of Labor and Social Welfare is charged with ensuring that the constitution and labor code are followed. It is divided into two bureaus; the Bureau of Labor and the Bureau of Social Welfare. The former enforces labor legislation and conducts regular inspections of enterprises. The latter is involved with overseeing pensions and mandated insurances.

Coronavirus (Covid-19) Guidance: A wage-subsidy program, the Employment Subsidy (Subsidio al Empleo), started Sept. 28, 2020.

Employers that had their sales or income decrease by 20% in the second quarter of 2020, compared to the second quarter of 2019, may apply for subsidies for employees whose employment contracts were previously suspended. The suspension must be either legally-enforced, and in effect for at least one day from Aug. 28 to Sept. 28, 2020, mutually agreed with the employee and in effect on Sept. 28, 2020, or must be any suspension of at least one day from Feb. 6 to July 31, 2021. The employee must have returned to work when the employer applies for the program. The amount of the subsidy for these workers is CLP$160,000 per employee per month for up to six months, or CLP$200,000 per month for employees who are women over age 18, men from age 18 to 23 or over age 55, or disabled workers.

Any employer may also apply for a six-month subsidy for new employees hired starting Sept. 29, 2020. The amount of the subsidy for these employees is 50% of the employee’s monthly wages, up to a maximum of CLP$250,000 per employee per month. However, the subsidy is instead 65% of wages, up to a maximum of CLP$290,000 per employee per month, for employees who are women over age 18, men from age 18 to 23 or over age 55, or disabled workers.

In both cases, eligible employees are those who earn up to three times the monthly minimum wage per month.

Unemployment benefit provisions: Employers that have their business affected by Chile’s quarantine measures that agree with employees to suspend employment contracts, or that must suspend employment contracts when employees cannot work because of quarantine measures, may apply to the Administrator of Unemployment Funds (Administradora de Fondos de Cesantia, abbreviated as AFC) using an online portal for employees to be paid unemployment benefits. Payments are made from employees’ unemployment fund accounts, and range from 70% of the employee’s average monthly wages for the previous three months in the first month of suspension to 30% starting in the sixth month for employees with indefinite employment contracts; or from 70% in the first month to 45% in the third month for employees with fixed-term contracts. If an employee’s account runs out of benefits, additional payments are made from a Solidarity Unemployment Fund (Fondo de Cesantia Solidario, abbreviated as FCS), using the same percentages of employees’ wages. However, these payments are subject each month to minimum limits ranging from CLP$175,000 to CLP$225,000, and maximum limits ranging from CLP$326,478 to CLP$652,956, depending on the length of suspension and the type of employment contract.

Employers must still pay all employer and employee social taxes based on the last monthly salary received before the suspension of the employment contract, or based on the salary indicated in the employment contract.

Parental leave: Law No. 21,247 allows employees taking parental leave that falls during Chile’s Covid-19 state of emergency to take additional leave of up to three consecutive 30-day periods after the parental leave period ends. As the additional period of leave is intended to protect against Covid-19 infection, it is referred to as preventive medical parental leave (licencia médica preventiva parental). Law No. 21,351 modifies Law No. 21,247 to allow parents of children up to two years of age who cannot attend day care centers because of social-distancing rules to suspend their employment contracts, even if they have taken at least one period of preventive medical parental leave. Employees that suspend their contracts are to receive the equivalent of their parental leave benefits for three months if they earn up to CLP$1 million per month, or either 70% of their parental leave benefits or CLP$1 million, whichever is greater, for three months if they earn more than CLP$1 million per month.

Vaccine leave: Law No. 21,347, published June 3, 2021, entitles employees to a half day of paid leave to receive vaccines, but the employer must be notified at least two days in advance.

Minimum Wage

Chile has two minimum wages in effect pertaining to payments for work performed in the course of employment: a standard minimum wage, which is applicable to workers who are at least 18 years of age and up to 65 years of age, and a minimum wage for workers who are younger than 18 years of age or more than 65 years of age. A third amount designated by the government as a minimum wage, the minimum wage for non-remunerative purposes, is inapplicable to payments to employees and therefore does not have the standard function of a minimum wage, instead functioning as the minimum monthly tax base for social insurance contributions assessed on individuals who are not employees, such as independent contractors and volunteers, and as a factor for calculations of some social insurance benefit payments.

Effective since May 1, 2021, the standard monthly minimum wage is CLP$337,000. Effective from Sept. 1, 2020, to April 30, 2021, the standard monthly minimum wage was CLP$326,500. Effective from March 1 to Aug. 31, 2020, the standard monthly minimum wage was CLP$320,500. Effective from March 1, 2019, to Feb. 29, 2020, the standard monthly minimum wage was CLP$301,000.

Effective since May 1, 2021, the monthly minimum wage for workers younger than 18 years of age or more than 65 years of age is CLP$251,394. Effective from Sept. 1, 2020, to April 30, 2021, the monthly minimum wage for workers younger than 18 years of age or more than 65 years of age was CLP$243,561. Effective from March 1 to Aug. 31, 2020, the monthly minimum wage for workers younger than 18 years of age or more than 65 years of age was CLP$239,085. Effective from March 1, 2019, to Feb. 29, 2020, the monthly minimum wage for workers younger than 18 years of age or more than 65 years of age was CLP$224,704.

The monthly minimum wages are scheduled for further adjustments Jan. 1 and May 1, 2022.

Effective since March 1, 2020, when minimum wage adjustments occur, the amounts resulting from multiplying the pre-adjustment minimum wages by the applicable percentage increase and adding those sums to the applicable pre-adjustment minimum wages are rounded to determine the revised minimum wages. The rounding is based on the amount registered in the hundreds, tens, and ones places, without regard to centavos. If the pre-rounding result has in its hundreds, tens, and ones places an amount up to CLP$249, the pre-rounding result is rounded down to the nearest multiple of CLP$1,000; an amount from CLP$500 to CLP$749, the pre-rounding result’s digits in the hundreds place and lower are discarded and replaced with CLP$500; and an amount of at least CLP$750, the pre-rounding result is rounded up to the nearest multiple of CLP$1,000.

In Chile, the minimum wage also is known as minimum income (ingreso mínimo).

Overtime

The overtime pay rate is 150% of the normal hourly wage and must be paid when work exceeds eight hours per day or 45 hours per week. Workers may work only two hours of overtime per day; the total number of hours worked per day, including overtime, may not exceed 10. The maximum overtime hours per day are set at two hours and may only be requested to deal with temporary needs. Exceptions exist during the Christmas holiday season.

Hours of Work

The maximum permissible workweek is six days or 45 hours. Work on Sundays and holidays is generally prohibited except for essential services and certain other exceptions.

Managers, directors, administrators, domestic workers, those who telecommute and others are not subject to these limitations on hours worked.

Holidays

Chilean law specifies 16 public holidays, but regions or territories can add to these or substitute others in their places. Workers earning a daily salary are entitled to be paid for Sundays and holidays, provided they complete a full shift during every work day of the week. Work performed on Sundays or legal holidays is treated as overtime.

The public holidays specified in law are:

Jan. 1: New Year’s Day
Good Friday
Holy Saturday
May 1: Labor Day
May 21: Navy Day
Starting in 2021, on the date of the southern winter solstice: National Indigenous Peoples’ Day; this holiday was specified for June 21 in 2021
Closest Monday to June 29: Feast of Saints Peter and Paul
July 16: Holiday of Our Lady of Mount Carmel
Aug. 15: Assumption
Sept. 18-19, Independence Day and Army Day; when these holidays fall on Tuesday and Wednesday, Sept. 17 also becomes a holiday, and when these holidays fall on Wednesday and Thursday, Sept. 20 also becomes a holiday
Closest Monday to Oct. 12: Columbus Day
Oct. 31: Reformation Day; when this holiday falls on Tuesday, it moves to the previous Friday, and when it falls on Wednesday it moves to the next Friday
Nov. 1: All Saints’ Day
Dec. 8: Immaculate Conception
Dec. 25: Christmas
Dec. 31: Bank holiday (typically a shortened workday but not a full holiday in other sectors)

Employers must grant May 1, Sept. 18 to 19, Dec. 25, and Jan. 1 as holidays, with exceptions for certain industries; however, even employees of employers covered by the exceptions must be granted the holidays at least once every two years that they work for the same employer.

The days of elections are also considered public holidays.

Leave

Workers who have worked for more than one year have the right to 15 days of annual leave. The vacation period is extended by one work day for every three years of service for a worker who has worked for 10 years or more, whether continuously or not. Vacation is usually taken during the summer (January and February) or the spring. Vacation generally should be take in a maximum of two periods.

Workers who are employed in Chile’s two southernmost regions, Aysén and Magallanes, as well as Palena, the southernmost province of Los Lagos Region, have the right to 20 days of annual leave.

Workers with variable wages taking vacation should be paid their average wage over the last three months.

Sick leave: Employees who have participated in the government health insurance program for at least six months and made contributions for at least three months are entitled to sick leave, paid by their health insurance after the fourth day of missed work. Employers may provide additional coverage if the health insurance payments are less than the worker’s salary or wages.

Family leave: Employees may take a leave of absence to care for seriously ill or disabled children younger than 18 years. There is a special subsidized leave for mothers to care for an unwell child less than one year old, which can be transferred to the child’s father at the mother’s option.

Bereavement leave: Employers must provide seven calendar days of paid leave from the date of death of a child or spouse of an employee. This is in addition to annual leave and may be taken regardless of time worked. In the case of the death of a parent, the employee is entitled to three business days’ leave from the date of death. If an unborn child dies, any worker (male or female) is entitled to three business days’ leave from the date when death is confirmed with the appropriate fetal death certificate. There is a one-month tenure protection for workers who suffer the death of a child or spouse beginning from the date of death.

Paid parental leave: Employers must provide female employees maternity leave of six weeks before and 12 weeks after delivery, paid for from a government or private health care insurance fund. If the child weighs less than 1,500 grams at birth, the leave is extended to 18 weeks. Leave can be extended up to one year for serious health conditions and can be split between the mother and the father.

Employers must provide male employees with five days of paid leave for the birth or adoption of a child. If the mother dies in childbirth or during her maternity leave, the father is entitled to her unused leave.

A worker who is the custodian or guardian of a child younger than six months may take up to 12 weeks’ leave. Any worker entitled to the 12-week full-time benefit may extend it to 18 weeks by working part time. In that case, the worker may collect pay for the hours worked, as well as the insurance benefit.

Lactation breaks: Working mothers must be given a minimum of one hour per workday to nurse children under the age of two. If it does not offer on-site day care, the employer must pay for the working mother’s transportation to and from the place where the child is being cared for.

Military leave: Employees’ jobs are guaranteed without loss of seniority if they are called to military service or training. Employers are required to pay regular wages to reserve personnel called to service for less than 30 days.

Wage Payment

The schedule of wage payments is usually stated in the employment contract, but the law requires payment at least once a month. Payment must be made on a work day and not on Saturday or Sunday. Remuneration must be paid in legal tender, check, or bank deposit.

Employers are required to provide employees with a receipt of payment along with any remuneration, which indicates the amount paid, form of payment, and all deductions.

Bonuses and Special Benefits

Profit Sharing: The Labor Code requires employers to distribute 30% of their net income to employees each fiscal year as a profit-sharing bonus. The basis used to determine the percentage is the company’s taxable income less 10% of its net tax equity, without taking into account any prior year losses. However, an employer that pays bonuses of at least 25% of its annual gross income to its employees, up to a maximum of 4.75 times the monthly minimum wages per employee, has no obligation to pay profit sharing, irrespective of the profits it has generated during the year.

Bonuses: While not legally required, Chilean employers customarily pay employees an annual bonus equal to one month’s salary and paid either in two installments, September and December, or in one installment in December. This is in addition to the annual profit-sharing payment.

Retirement Plans: Chile established a mandatory private pension accounts system in 1980, known as the Individual Capitalization System, and reformed it in 2008. In this system, employers withhold funds from worker’s paychecks and make contributions to approved pension fund administrators (administradores de fondos de pensiones, abbreviated as AFPs). The employer funded portion of the contributions is placed in a Disability and Survival Fund, which employees can only access in certain cases. These funds are overseen and regulated by the Superintendency of Pensions. Compulsory payments to the pensions are income tax deferred, while voluntary contributions must be made post tax.

Coverage: All employers are required to withhold from employees and make payments. Employers with workers who are still on the pre-1980 Social Security system do not have to withhold payments for the private pension system, but must make withholdings for payments to the Social Security Institute.

Employers are required to remit withholdings within 10 days after remuneration is earned.

Rate: Applicable rates for pension funding and the Disability and Survival Fund and the maximum taxable limit for these assessments are available in the Social Taxes section of this primer.

Taxable Wages: Employee contributions are calculated based on all salary, pensions, and wages.

Registration: While employees who have worked more than 24 months can choose between one of the various AFPs, new employees are automatically enrolled in a specified provider for their first 24 months. Employees must only have funds in one AFP at a time. Employees who wish to change AFPs may do so by filing an Irrevocable Transfer Order Form at the new AFP’s office, a sales agent, or online. Changes take effect on the first day of the following month.

Employers should notify the AFP if a worker resigns, performs work without pay, is absent for a medical reason, or if the worker has been fired.

Returns and Remittance: AFP payments may be made monthly at an AFP, approved banks, approved financial institutions, compensation registries, or online on the PREVIRED website. Payments must be made by the 10th of each month. However, if one is making payments online, they are due by the 13th of the month.

Recordkeeping: Documents should generally be kept for five years. Additionally, employers should inform AFPs of changes in employment impacting withholding rates. AFPs will assume when employers pay reduced amounts that employers have failed to fulfill their obligations unless they have been informed of these cases in advance.

Penalties: Employers that fail to declare or pay any of the Social Security costs incur a fine of 0.75 account units per employee per month plus interest. All employers that fail to make payments or file returns will be barred from receiving funds from public or private institutions funded by tax revenue.

Individual Voluntary Pension Savings: Employees who wish to make larger contributions to a pension account may open an individual voluntary pension savings account. This exempts them from enrollment in an AFP. However, contributions are not tax deferred, nor can contributions be considered deductions for income tax purposes.

Private Health Insurance: All workers have the option of enrolling in one of the private health insurance programs (ISAPREs) or in the National Health Fund (FONASA). All employers must withhold and pay a percentage of enrolled employees’ taxable pay.

Coverage: All employers with one at least one employee must pay an ISAPRE, unless their employees have elected to remain on the FONASA.

Rates and Thresholds: The applicable rate for FONASA contributions and the maximum taxable limit for FONASA contributions are available in the Social Taxes section of this primer. Contribution rates for ISAPREs vary among them.

Taxable Amounts: The ISAPRE is levied on the total salary of employees.

Registration: Employees must sign a private contract with the ISAPRE they wish to participate in. However, if employees have never been enrolled in an ISAPRE they must file a Declaration of Health with the ISAPRE’s Medical Control Office prior to signing a contract. If and when the ISAPRE’s charges change, the ISAPRE must notify employers before the tenth day of the month.

Returns and Remittance: ISAPREs, like FONASA, must be declared and paid within the first 10 days of the month in which taxable wages were issued. However, if paid online, payments can be made by the 13th of the month. Payments can be made online on the PREVIRED website, at an IPS office, a compensation registry, or at approved financial institutions.

Termination Pay

Compensation is payable (unless an individual or collective agreement is made with more favorable terms) equivalent to 30 days of the last monthly compensation earned for each year of service worked and fraction greater than six months. The upper limit is 330 days for workers with a contract in force for one year or more. If a dismissal for misconduct is declared unjustified, unfair, or unlawful, compensation may be further increased by up to 150%. Terminated employees must be paid for unused vacation days.

Workers’ Compensation

Employers must either contribute to the national workers’ compensation fund (Security of Work Accidents and Occupational Illnesses) or one of three private Benefits Societies of Employers. The three nonprofit Benefits Societies of Employers are the Asociacion Chilena de Seguridad (ACHS), the Instituto de Seguridad del Trabajo (IST), and the Mutual de Seguridad de la Camara Chilena de la Construccion. In order to enroll in one of the Benefits Societies of Employers, employers must file a Membership Application with the Institute of Social Prevention (IPS). Employer contributions are as follows:

Applicable rates for workers’ compensation program funding and the maximum taxable limit for workers’ compensation program funding are available in the Social Taxes section of this primer.

Payments can be made directly to the Benefits Societies of Employers or on the PREVIRED website.

Recordkeeping

Employers with five workers or more must keep a log of remuneration paid.

The statute of limitations on labor related penalties and lawsuits is five years.

FOREIGN WORKERS

Foreign workers are entitled to the same rights as Chilean citizens and generally are covered by the same tax and workplace laws.

The Labor Code provides that companies must employ at least 85% Chilean personnel. For purposes of calculating this percentage, technicians who cannot be replaced by Chilean personnel, foreigners resident in Chile for more than five years, parents of Chilean children and foreigners married to Chileans are counted as Chileans. Enterprises that employ 25 or fewer workers are exempt from this requirement.

Visas: Work permits must be obtained by foreign personnel before they can perform remunerated labor within Chile. The employer must be domiciled in Chile. In the case of foreign personnel who are to be hired by an employer, a contract visa is obligatory for both short and long-term contracts. An employer interested in obtaining a contract visa for a foreign worker should apply to the Foreign Affairs Ministry of Chile. Once the visa is granted, the worker must go to the Chilean consulate in his own country to have the visa stamped. This kind of visa can also be obtained in Chile by a foreign worker who has entered the country with no work permit. The visa is granted to a foreigner and his family for up to a two-year period (renewable in Chile). The contract must contain a special clause whereby the employer undertakes to pay the return fares for the foreigner and the foreigner’s family. A temporary residence visa may also be obtained for a period of up to one year (renewable), in those circumstances where there is no local employer supporting the visa application (i.e., in the case of a foreign company with no local presence that sends its own employee to perform work in Chile or a foreign investor who will perform personal activities in Chile).

A Working Holiday Visa Scheme is in effect for the countries that take part in the Pacific Alliance, which in addition to Chile includes Colombia, Mexico, and Peru. Individuals from Colombia, Mexico, or Peru who are between the ages of 18 and 30 can receive work visas to live in Chile for up to a year under the scheme.

Taxes: Individuals and legal entities that are not resident or domiciled in Chile are taxed on any income derived from Chilean sources for their first three years living in Chile. Depending on the type of income, a tax return must be filed annually or monthly. Tax on nonresidents is referred to by the Chile Internal Revenue Service as Additional Tax. The general rate of Additional Tax is 35%, with lower rates applying for some types of income.

Employers withholding Additional Tax from nonresident workers or workers who are not domiciled in Chile must make monthly payments to the Treasury using Form 50. These filings should be made the month after the income was withheld. These payments can be filed on the SII website or at an SII office.

Wages/Payments: There is no requirement for remunerations to be paid in Chile. They can be paid anywhere in the world, either by the employer or by any other company. However, if the remuneration relates to services provided in Chile, it is subject to Chilean taxes regardless of the place where the remuneration is paid.

In general, employers and foreign personnel both must pay Social Security contributions when such personnel work under a work contract. However, there is an exemption from making Social Security contributions for a foreign technician and the company that hires him if the following two conditions are met: the individual has Social Security outside Chile covering, at least, illness, pension, disability and death; and the individual expressly declares in his individual work contract that he will remain affiliated with the foreign Social Security system.

WORKING IN THE UNITED STATES

Foreign workers from Chile must meet general visa requirements and be certified to be employed in the U.S. General visa requirements for the U.S.are included in the separate

Chile is eligible for the visa waiver program for business visitors, which allows Chilean citizens to travel to the U.S. for 90 days or less for business-specific purposes without having to obtain a B-1 business visa. Stays longer than 90 days will require a visa. Individuals may return to the U.S. under the visa waiver program if a “reasonable length of time” has passed. The determination for reasonable length of time is at the discretion of the Department of Homeland Security.

Chilean workers are eligible to work in the U.S. under H-2B visas, which cover labor or services of a temporary or seasonal nature in occupations other than agriculture or registered nursing. The number of H-2B visas issued each year is limited by U.S. law.

U.S. employers also must check the names of all new-hires and employees against the Specially Designated Nationals and Blocked Persons List, administered by the Treasury Department’s Office of Foreign Assets Control (OFAC). Because OFAC prohibits financial transactions with individuals on the list, employers cannot employ them and may face fines for failing to comply.

For tax purposes, Chilean citizens are subject to U.S. employment-based taxation on income earned in the U.S. unless they work under specific visa types that exempt earnings from taxes. Chile has a social tax totalization agreement with the U.S.

State and local taxation of Chilean workers also can apply, although some states within the U.S. recognize international tax treaties that can eliminate that income tax liability for foreign workers.

The U.S. labor laws apply to all workers employed and providing services in the country.

Work eligibility as an employee is contingent upon Department of Homeland Security and Labor Department approval and the employee receiving a U.S. Social Security number from the Social Security Administration.

Tax Residency: In general, employees working in the U.S. on a temporary basis are considered nonresidents for tax purposes unless they qualify for resident status. Employees can be granted permanent resident status through the so-called green card test or if they meet the substantial presence test under the U.S. tax code. More information on these requirements is in the

Permanent residents are subject to U.S. tax requirements the same as U.S. citizens and are taxed under the U.S. system on their worldwide earnings.

Income Taxes: Generally, nonresidents in the U.S. who are from Chile and are working in the U.S. are subject to U.S. taxes based on their U.S.-sourced income. Income is taxed differently based on whether it is categorized as wage income or nonwage income, which includes interest and dividends.

A Form W-4, Employee’s Withholding Certificate, must be filed by each employee with their employer. All nonresidents in the U.S. who are from Chile and are working in the U.S. must claim “single” in Step 1c, regardless of marital status; write “Nonresident Alien” or “NRA” in the space under Step 4c of the form; and may not claim “exempt” in the space under Step 4c.

Nonresident alien employees may adjust withholding using Step 2b or 2c of the Form W-4; certain employees also may be able to use Steps 3, 4a, or 4b. More information about Form W-4 requirements for nonresident alien employees is available in the

Although the versions of Form W-4 issued in 2020 or later significantly differ from the versions issued in 2019 or earlier, nonresident employees that filed a valid version of Form W-4 from 2019 or earlier with their employer do not need to file another Form W-4 with the employer unless they need to implement a change for their withholding. On Forms W-4 issued in 2019 or earlier, nonresident alien employees were required to check the “single” box on line 3, regardless of marital status; write “Nonresident Alien” or “NRA” above the dotted line on line 6; and were not permitted to claim “exempt” on line 7 of the form.

An additional amount is added to a nonresident alien employee’s wages for calculating federal income tax withholding, with the amount based on pay period frequency and the date of the employee’s most recently filed Form W-4. The table of additional amounts applicable to Forms W-4 from 2020 or later and the table applicable to Forms W-4 issued before 2020 are available in the

Nonwage income and self-employed foreign workers can be subject to income tax withholding at a flat rate of 30%.

Additionally, foreign workers may be taxed differently based on the specific type of visa they hold.

Tax treaties: Chile and the U.S. do not have a tax treaty.

Social Taxes: Most foreign workers are subject to paying into the U.S. Social Security system. Foreign nationals who are exempt from paying income tax and who do not have the eligibility to receive a Social Security number may not be required to pay social taxes. Foreign workers contributing to Social Security for a certain time period may be eligible to receive benefits.

Generally, foreign workers in the U.S. that have specific visas as exchange visitors or students or who are temporarily in the U.S. for agricultural work are not subject to social taxes on income that is obtained from the purpose in which they originally entered the U.S.

Totalization Agreements: Social Security totalization agreements can allow foreign workers and U.S. nationals working abroad to avoid paying into two social security systems while being subjected to losing benefits for their home country system. Under totalization agreements, generally, foreign workers will only pay into one of the social security systems, either the home or the foreign system, but not both. Foreign nationals, utilizing a totalization agreement, also can count years of contributions paid to different social security systems to all of the systems they have contributed to in order to be eligible for benefits in one country.

Chile and the U.S. have entered into a totalization agreement and a summary of those provisions is included in

Wage Payment: Under certain visas for certain types of employment, employers are required to pay foreign workers the higher of either the prevailing wage or the actual wage that is paid to U.S. workers that have similar skills and qualifications.

There are no particular requirements that employees be paid in U.S. dollars.

TREATY ARRANGEMENTS

Chile has entered into more than 30 income tax treaties. Chile and the United States have signed an income tax treaty that has not been ratified by both countries, although Chile and the United States have a totalization agreement in effect with regard to social security contributions.

The countries with which Chile has a bilateral income tax treaty in effect are Argentina, Australia, Austria, Belgium, Brazil, Canada, China, Colombia, Croatia, Czech Republic, Denmark, Ecuador, France, Ireland, Italy, Japan, Malaysia, Mexico, New Zealand, Norway, Paraguay, Peru, Poland, Portugal, Russia, South Africa, South Korea, Spain, Sweden, Switzerland, Thailand, and the United Kingdom.

Chile has totalization agreements for social tax purposes with more than 35 countries. It has agreements with Andorra, Argentina, Australia, Austria, Belgium, Bolivia, Brazil, Canada, Quebec, Colombia, Costa Rica, Cuba, Czech Republic, Denmark, Dominican Republic, Ecuador, El Salvador, Finland, France, Germany, Guatemala, Honduras, Luxembourg, Mexico, Netherlands, Nicaragua, Norway, Panama, Paraguay, Peru, Portugal, South Korea, Spain, Sweden, Switzerland, United Kingdom, United States, Uruguay, and Venezuela.

RESOURCES

In English unless otherwise noted.

General

U.S. State Department: U.S. Relations With Chile

CIA World Factbook: Chile

Constitution of 1980 with 2009 reforms (Spanish)

Hudson, Rex A., ed., Chile: A Country Study. Washington: Library of Congress (1994)

U.S. Library of Congress, Country Studies, Chile

Currency Details

International Organization for Standardization: Currency Codes - ISO 4217

Unicode Consortium: Currency Symbols

United Nations: United Nations Terminology Database: Chile

Taxes

Chilean Internal Revenue Service, IRS How To Guide (Spanish)

International Finance Corporation (The World Bank), Doing Business: Employing Workers in Chile

Chilean Internal Revenue Service, Circulars on tax rates for 2017 (Spanish)

Ministry of Health (Spanish)

Ministry of Health and Social Prevention (Spanish)

PREVIRED

U.S. Social Security Administration, Social Security Programs Throughout the World: The Americas: Chile

Compensation and Benefits

Department of Labor (Spanish)

Labor Code (Spanish)

Law No. 21,112 (Spanish)

Ministry of Finance and Ministry of Labor and Social Welfare, Subsidio al Empleo (Spanish)

Law No. 21,247 (Spanish)

Foreign Workers

Embassy of Chile, Washington, D.C. (Spanish)

Ministry of Immigration

Ministry of Immigration (Spanish)

Pacific Alliance website(Spanish)

Working in the United States

U.S. Department of Labor:

Foreign Labor Certification
Hiring Foreign Workers

U.S. Internal Revenue Service:

IRS Notice 1392, Supplemental Form W-4 Instructions for Nonresident Aliens
IRS Publication 15, Circular E, Employer’s Tax Guide
IRS Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities
IRS Publication 519, U.S. Tax Guide for Aliens
IRS Publication 901, U.S. Tax Treaties

U.S. Department of State, Visa Waiver Program

Treaty Arrangements

Chile Internal Revenue Service, List of International Tax Agreements and Legislation

Totalization Agreement between Chile and the United