In a historic milestone, the Chilean Senate unanimously approved the initiative amending the agreement to avoid double taxation with the United States. This measure, scheduled to take effect in January 2024, represents a significant step in strengthening trade relations and tax cooperation between the two countries. After years of efforts and negotiations, Chile and the United States have successfully eliminated tax barriers affecting bilateral activities and investments.
The Agreement between Chile and the United States, aimed at avoiding double taxation and preventing tax evasion related to Income Tax and Heritage Tax, was agreed upon in Washington D.C. on February 4, 2010. Although approved by the Chilean Congress in 2015, its ratification by the U.S. Senate on June 22, 2023, with two previously negotiated reservations, was crucial for its entry into force.
This agreement is based on the OECD tax treaty model, adapted to the laws and tax policies of both countries. This treaty will invigorate reciprocal investments between Chile and the United States. Furthermore, it will benefit the trade relationship by eliminating double taxation and improving conditions for investment. Currently, U.S. investment represents 10.9% of foreign investment in Chile, and it is expected that this agreement will stimulate continuous growth.
You can also read about Corporate Transparency Law in the United States.
During the same Senate session, a protocol amending the agreement between Chile and Brazil to avoid double taxation and prevent tax evasion was also approved. This protocol, modernizing the agreement signed in 2001, incorporates standards promoted by the OECD and the G20. The acting Minister of Foreign Affairs highlighted that this agreement with Brazil will modernize bilateral instruments with the region's top trading partner and the third-largest globally.
Chile joins other Latin American countries that have established similar agreements to avoid double taxation. Inspired by international standards, these treaties aim to promote foreign investment and facilitate commercial transactions. Countries like Mexico, Colombia, and Argentina have also signed bilateral agreements with various nations, reflecting the importance of creating conducive environments for economic development and international cooperation in the region.
The agreement eliminating double taxation between Chile and the United States represents a significant achievement in strengthening bilateral relations and promoting an environment conducive to investment. With the expected entry into force in January 2024, this treaty is anticipated to mark the beginning of a new era in economic collaboration between both countries, generating mutual benefits and contributing to sustainable development in the region.
In conclusion, the approval of the initiative amending the agreement to avoid double taxation between Chile and the United States is a significant milestone in strengthening trade relations and tax cooperation between the two countries. This agreement, based on the OECD tax treaty model, will eliminate tax barriers and improve conditions for investment, benefiting both foreign and domestic investors. With the expected entry into force in January 2024, this treaty marks the beginning of a new era of economic collaboration between Chile and the United States. It is an important step towards creating a conducive environment for economic development and international cooperation in the region.
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