Chile VAT on e-services
Chile’s Value Added Tax on electronic services provided by non-resident providers. The Tax Modernisation Law is effective from 1 June 2020.
E-service subject to VAT
Sevices within the VAT net include:
- Downloads or streaming media
- Cloud (SaaS) and downloads of software
- Platform as a Service (PaaS)
- Online advertising services
- Intermediary services
- Software licences
Identifying residency of customer
In order to identify if a consumer should be charged Chilean VAT, the following factors may be considered:
- IP address
- Credit card, transfer for banking address
- Address provided
- SIM indemnity with Chile country code
Digital taxation simplified regime
Foreign providers may use a simplified registration scheme. This includes a special online portal which allows English, and other foreign language submissions.
Compliance requirements for affected businesses are light: no invoices or VAT books need to be prepared. However, there is no facility to apply for credit on input VAT suffered.
VAT returns are filed monthly or quarterly; the option is the choice of the taxpayer. Submissions are due by the 20 of the month following the reporting period end.
Liabilities of marketplaces
Whilst the implementing legislation indicates only the underlying supplier of the e-service is liable to VAT, the Chilean IRS has indicated that marketplaces selling app’s on behalf of the supplier will take on the VAT principal role.
Payment provider withholding VAT
In the case where the provider is not VAT registered with the Chilean tax office, payment providers must withhold the VAT due. These include: credit and debit cards; payment wallets; and banks facilitating transfers.
Where the customer is a VAT registered business, then the reverse charge should be applied. This requires the customer to record the input VAT on behalf of the foreign provider.