The Chilean government recently enacted two international conventions on the avoidance of double taxation, which entered into force on January 1 2000. These enactments join a growing body of Chilean international tax legislation.

The two agreements were reached with Mexico and Canada and apply the rules outlined in the OECD's (Organization for Economic Cooperation and Development) Model Tax Convention to Chilean tax relations with these countries. The agreements facilitate international investment activities by reducing tax rates and, most importantly, by applying the OECD's principles on business profits to investments between the respective countries. As a consequence, certain income earned by Mexican and Canadian companies in Chile that was formerly taxable in Chile will now be tax exempt.

Chile entered into a double taxation treaty with Argentina in 1986, a convention with Poland is awaiting congressional approval, and agreements with other countries (eg, the United States) are under discussion.

For further information on this topic please contact Héctor Lehuedé at Carey y Cía by telephone (+56 2 365 7216) or by fax (56 2 633 1980) or by e-mail ([email protected]).

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