Chile’s Draft VAT Guidance for Remote Sellers and Digital Services Providers

From 2020 onwards, the Chilean government adopted several laws and amendments that obligate non-resident digital services providers to charge and remit VAT on digital services provided to Chilean consumers. One of the significant years was 2023, when the government broadened the VAT base to include most services as taxable.

Nevertheless, there were some inefficiencies and unclearness regarding applying the VAT obligation to non-resident sellers. To address these issues, the Chilean Tax Authority published the draft guidance on VAT for non-resident sellers (Draft).

Importance of Guidance for Non-Resident Sellers

The most critical issues were the sourcing rules for remote sellers and the new obligation for them to collect VAT. The Draft defines remote services as those provided from far away, regardless of how they are delivered. Two conclusions can be drawn from this: first, intermediary services or advertising also fall under the category of remote services, and second, means of delivery are not essential for remote services.

Moreover, based on the wording, it can be concluded that the Chilean government aims to subject any service provided by non-resident taxable persons to Chilena users or customers to VAT as remote.

Furthermore, the Draft clarifies that non-resident digital service providers that provide remote service to Chilean citizens must register for VAT in Chile through a simplified scheme.

Regarding goods sold remotely to customers in Chile, it is already known that remote sellers must collect and remit VAT if the value of the sold goods is below the USD 500 threshold. However, according to the Draft, starting on October 25, 2025, remote sellers and platforms will have to register for VAT through a simplified scheme.

The portal that non-resident taxable persons will use for VAT purposes remains Portal IVA Digital (Portal VAT Digital), whereas the tax on remote services will continue to be called IVA Digital (VAT Digital).

Conclusion

The Tax Authority's clarifications and explanations are vital for all foreign digital service providers and remote sellers conducting business in Chile and selling to Chilean customers. Moreover, since the draft is open for public consultation, all interested parties may submit their opinions until January 6, 2025.

Therefore, these rules may change after the consultations are closed and all submitted opinions are reviewed. However, even if further changes are made, VAT obligations for non-resident service providers and sellers should not be expected to be significantly affected.

Source: Internal Revenue Service, KPMG, VATabout