Type of Taxes

Income tax system

Income tax, established under Decree Law 824 of 1974, is a direct tax on the income of persons who, as a general rule, pay it annually through a tax return filed in April of each year. Income tax is levied on different types of income through different taxes: First Category Tax; Second Category Tax; Global Complementary Tax; and Withholding

Tax (also referred to as Additional Tax).

• First Category Tax

This is levied on income from capital and that of commercial, industrial, mining and other

companies. It is calculated on the base of the income accrued or received less expenditures. The rate of First Category Tax depends on the tax regime that the payer opts to use among two options: the Totally Integrated System (also known as the

Attributed Income System) and the Partially Integrated System.

• Second Category Tax

Second Category Tax is a progressive tax levied on income obtained as an employee such as wages, pensions (except those with an overseas source) and ancillary or complementary income. It is charged according to income brackets at rates from 0% to a top marginal rate of 35%.

• Global Complementary Tax

Global Complementary Tax is a final tax paid by natural persons domiciled or resident

in Chile, regardless of whether they are citizens of Chile or another country. It is levied

annually on the base of taxable income calculated in accordance with the norms for

First and Second Category Tax. It is charged according to a progressive scale of rates by

income bracket, starting at 0% and reaching a top marginal rate of 35%.

• Withholding Tax

Withholding Tax (or Additional Tax) is levied on income with a Chilean source obtained

by natural persons or legal entities not domiciled or resident in Chile. Depending

on the type of income, it may be retained or subject to the filing of an annual return.

The general rate of Withholding Tax is 35%.