2023 Investment Climate Statements: Chile

Policies Towards Foreign Direct Investment

For more than four decades, promoting FDI has been an essential part of the Chilean government’s national development strategy. The country’s market-oriented economic policies create significant opportunities for foreign investors to participate. Laws and business practices do not discriminate against foreign investors, who receive treatment no less favorable than Chilean nationals and domestic companies. Chile’s business climate is generally straightforward and transparent, and its policy framework has remained consistent despite developments such as civil unrest in 2019 and the COVID-19 pandemic. However, the permitting process for infrastructure, mining, and energy projects is lengthy and involved, especially regarding politically sensitive environmental impact assessments, water rights issues, and indigenous consultations. In response to the widespread civil unrest of 2019, the Chilean government launched a constitutional rewrite process, which started in 2021. The first attempt to revamp the constitution ended following a September 2022 referendum in which most of the population rejected the draft text. Subsequently, due to popular demand, the Chilean Congress authorized a second attempt to rewrite the constitution. According to the set timeline, Chileans will vote in May for members of the Constitutional Council, which will be responsible for redrafting the constitution text and in December the general population will participate in a mandatory vote to approve or deny new proposed text.

InvestChile is the government agency responsible for facilitating the entry and retention of FDI into Chile. It provides services related to investment attraction (information about investment opportunities); pre-investment (sector-specific advisory services, including legal); landing (access to certificates, funds, and networks); and after-care (including assistance for exporting and re-investment).

Chile’s 2015 Framework Law for Foreign Investment mandates InvestChile to identify obstacles to the materialization of FDI projects. To comply with this mandate, InvestChile monitors the environmental conditions for foreign investment, articulates support networks in both the public and private sectors, and promotes public initiatives for improvement, considering the concerns presented by its stakeholders.

In May 2018, the Ministry of Economy created the Sustainable Projects Management Office (GPS), currently named as Major Projects Office, which provides support to investment projects, both domestic and foreign, serving as a relevant point of contact with the government and coordinating with different agencies in charge of investment projects assessment and permitting processes.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign investors have access to all industries, except for the domestic maritime freight sector, in which foreign ownership of companies is capped at 49 percent. Since 2019, transit between domestic ports was allowed for foreign cruise vessels with over 400 passengers. Fishing and aquaculture activities, as well as the registration of vessels for industrial fishing, are reserved to Chilean individuals or legal entities incorporated under Chilean law, with some exceptions for international reciprocity cases. In the telecommunications and broadcasting sectors, only legal entities incorporated and domiciled in Chile may own a concession, and there are restrictions on foreigners to join the corporate government of radio and television firms.

With few exceptions, enterprises in Chile may be 100 percent owned by foreigners. Chile only restricts the right to private ownership or establishment in what it defines as certain “strategic” sectors, such as nuclear energy and mining. The current Constitution establishes the “absolute, exclusive, inalienable and permanent domain” of the Chilean state over all mineral, hydrocarbon, and fossil fuel deposits within Chilean territory. However, Chilean law allows the government to grant concession rights and enter into lease agreements with individuals and companies for exploration and exploitation activities, and to assign contracts to private investors, without discrimination against foreign investors.

Chile has not implemented an investment screening mechanism for national security purposes. FDI is subject to pro forma screening by InvestChile. Businesses in general do not consider these reviews by InvestChile as barriers to investment because the approval procedures are expeditious, and investments are usually approved. Some transactions require an anti-trust review by the office of the national economic prosecutor (Fiscalía Nacional Económica) and possibly by sector-specific regulators.

Other Investment Policy Reviews

The World Trade Organization (WTO) has not conducted a Trade Policy Review for Chile since June 2015 (the latest report is available here: https://www.wto.org/english/tratop_e/tpr_e/tp415_e.htm). The Organization for Economic Co-operation and Development (OECD) latest Investment Policy Review for Chile is from 1997, available here: http://www.oecd.org/daf/inv/investment-policy/34384328.pdf . On March 27, 2023, the OECD published a new report named “FDI Qualities Review of Chile: Boosting sustainable development and diversification,” which contains an updated assessment of Chile’s FDI policy framework as well as policy recommendations. Chile is not part of the countries covered to date by the United Nations Conference on Trade and Development’s (UNCTAD) Investment Policy Reviews.

Business Facilitation

The Chilean government has taken significant steps towards facilitating business transactions over the past decade. Starting in 2018, the government introduced an updated electronic and online systems for providing some tax information, submitting complaints related to contract enforcement, and completing online registration of closed corporations (i.e., non-public corporations). In June 2019, the Ministry of Economy launched the Unified System for Permits (SUPER), an online single-window platform that brings together 182 license and permit procedures, simplifying the process of obtaining permits for investment projects.

According to the World Bank, Chile has one of the shortest and user-friendly processes among Latin American and Caribbean countries – 11 procedures and 29 days – to establish a foreign-owned limited liability company (LLC). Drafting statutes of a company and obtaining an authorization number can be done online at https://www.registrodeempresasysociedades.cl/ . Electronic signature and invoicing allow foreign investors to register a company, obtain a taxpayer ID number and get legal receipts, invoices, credit and debit notes, and accountant registries. A company typically needs to register with Chile’s Internal Revenue Service, obtain a business license from a municipality, and register either with the Institute of Occupational Safety (public) or with one of three private nonprofit entities that provide work-related accident insurance, which is mandatory for employers. In addition to the steps required of a domestic company, a foreign company establishing a subsidiary in Chile must authenticate the parent company’s documents abroad and register the incoming capital with the Central Bank. This procedure, established under Chapter XIV of the Foreign Exchange Regulations, requires a notice of conversion of foreign currency into Chilean pesos when the investment exceeds $10,000. The registration process at the Registry of Commerce of Santiago is available online.

Outward Investment

The Government of Chile does not have active policies to promote or incentivize outward investment, nor does it impose restrictions on FDI.

Transparency of the Regulatory System

Chile’s legal, regulatory, and accounting systems are transparent and generally provide clear rules for competition and a level playing field for foreigners. They are consistent with international norms; however, environmental regulations – which include mandatory indigenous consultation required by the International Labor Organization’s Indigenous and Tribal Peoples Convention (ILO 169) – and other permitting processes have become lengthy and unpredictable, especially in politically sensitive cases.

Chile does not have a regulatory oversight body. Four institutions play key roles in the rule-making process: The General-Secretariat of the Presidency (SEGPRES), the Ministry of Finance, the Ministry of Economy, and the General Comptroller of the Republic. Most regulations come from the national government; however, some, particularly those related to land use, are decided at the local level. Both national and local governments are involved in the issuance of environmental permits. Regulatory processes are managed by governmental entities. NGOs and private sector associations may participate in public hearings or comment periods.

In Chile, non-listed companies follow norms issued by the Accountants Professional Association, while publicly listed companies use the International Financial Reporting Standards (IFRS). Since January 2018, IFRS 9 entered into force for companies in all sectors except for banking, in which IFRS 15 will be applied. IFRS 16 entered into force in January 2019. On January 1, 2022, Chile’s Financial Market Commission (CMF) began implementation of the IFRS 17 accounting standards in the Chilean insurance market.

The legislation process in Chile allows for public hearings during discussion of draft bills in both chambers of Congress. Draft bills submitted by the Executive Branch to the Congress are readily available for public comment. Ministries and regulatory agencies are required by law to give notice of proposed regulations, but there is no formal requirement in Chile for consultation with the public, conducting regulatory impact assessments of proposed regulations, requesting comments, or reporting results of consultations. For lower-level regulations or norms that do not need congressional approval, there are no formal provisions for public hearing or comment. As a result, Chilean regulators and rulemaking bodies normally consult with stakeholders, but in a less formal manner.

All decrees and laws are published in the Diario Oficial (roughly similar to the Federal Register in the United States), but other types of regulations are not always found there. There are no other centralized online locations where regulations in Chile are published.

According to the OECD, compliance rates in Chile are generally high. The approach to enforcement remains punitive rather than preventive, and regulators still prefer to inspect rather than collaborate with regulated entities on fostering compliance. Each institution with regulation enforcement responsibilities has its own sanction procedures. Law 19.880 from 2003 establishes the principles for reversal and hierarchical recourse against decisions by the administration. An administrative act can be challenged by lodging an action in the ordinary courts of justice, or by administrative means with a petition to the Comptroller General of the Republic. Affected parties may also make a formal appeal to the Constitutional Court against a specific regulation.

Chile still lacks a comprehensive, “whole of government” regulatory reform program. The OECD’s April 2016 “Regulatory Policy in Chile” report asserts that Chile took steps to improve its rule-making process, but still lags the OECD average in assessing the impact of regulations, consulting with outside parties on their design and evaluating them over time. The World Bank´s Global Indicators of Regulatory Governance project finds that Chile is not part of the countries that have improved their regulatory governance framework since 2017.

Chile’s level of fiscal transparency is excellent. Information on the budget and debt obligations, including explicit and contingent liabilities, is easily accessible online.

International Regulatory Considerations

Chile does not share regulatory sovereignty with any regional economic bloc. However, several international norms or standards from multilateral organizations (UN, WIPO, ILO, among others) are referenced or incorporated into the country’s regulatory system. As a member of the WTO, the Chile notifies draft technical regulations to the WTO Committee on Technical Barriers to Trade (TBT).

Legal System and Judicial Independence

Chile’s legal system is based on civil law. Chile’s legal and regulatory framework provides for effective means for enforcing property and contractual rights.

Laws governing issues of interest to foreign investors are found in several statutes, including the Commercial Code of 1868, the Civil Code, the Labor Code and the General Banking Act. Chile has specialized courts for dealing with tax and labor issues.

The judicial system in Chile is generally transparent and independent. The likelihood of government intervention in court cases is low. If a state-owned firm is involved in the dispute, the Government of Chile may become directly involved through the State Defense Council, which represents the government interests in litigation cases related to expropriations.

Regulations can be challenged before the court system, the National Comptroller, or the Constitutional Court, depending on the nature of the claim.

Laws and Regulations on Foreign Direct Investment

Law 20,848 of 2015 establishes a new framework for foreign investment in Chile and created InvestChile and the Agency for the Promotion of Foreign Investment (APIE), the successor to the former Foreign Investment Committee. The InvestChile website ( https://investchile.gob.cl/ ) provides relevant laws, rules, procedures, and reporting requirements for investors. Foreign investors are also protected by Chile’s adherence to multilateral treaties and its network of bilateral trade agreements, which provide them with international investment protection standards.
New laws and regulations from 2022 that may impact foreign investors include Law 21.431, which reforms the Water Code; Law 21.470, which amends the Labor Code regarding contracts of workers hired by digital platform service companies; Law 21,521 or “Fintech Law,” which promotes competition and financial inclusion through innovation and technology in the provision of financial services; and Resolution 144 of May 25, issued by the InvestChile, which sets out information that must accompany an interested party wishing to obtain a Chilean residency permit.

Competition and Antitrust Laws

Chile’s anti-trust law prohibits mergers or acquisitions that would prevent free competition in the respective industry. An investor may voluntarily request a ruling by an Anti-trust Court that would state a planned investment would not have competition implications. The national economic prosecutor (FNE) is an active institution in conducting investigations for competition-related cases and filing complaints before the Free Competition Tribunal (TDLC), which has jurisdiction over those cases.

In February 2022, the FNE prohibited Nexus Chile SpA from aquiring Colmena –a health insurance company. Nexus Chile SpA is an investment fund associated to U.S. holding Nexus Chile Health LLC, which already controls Nueva MasVida, another health insurer. In the justification of its ruling, the FNE noted the risk Nexus Chile SpA posed of potentially being able to impose significant increases on health insurance premiums.

In February 2022, the FNE approved the acquisition of WarnerMedia LLC by Discovery, Inc. to create a new entertainment group, Warner Bros, Discovery. subject to mitigation measures such as the prohibition of sales of related TV channels and contents from both companies.

In March 2022, the FNE cleared a joint venture between Chinese state-owned enterprise China Southern Power Grid International (CSGIHK), Colombian firm ISA and Transelec –holding controlled by CSGIHK and three Canadian pension investment funds- to build a new 1,400 km-long energy transmission line linking northern and central Chile.

In March 2022, after Chile’s Constitutional Court ruled out a claim submitted by the firms, the FNE continued the collusion case presented in 2021 against the three main securities transport companies that operate in Chile -Brink’s Chile S.A., Prosegur and Loomis-, for a price-fixing scheme that took place between 2017 and 2018. The FNE asked the TDLC to apply fines amounting to US$ 63.4 million against the firms and their executives in charge of the Chile offices.

In October 2022, the FNE asked the TDLC to order Transbank – a technology company that offers a platform for cashless payment solutions – and its 10 shareholder banks to comply with the sentence issued by Chile’s Supreme Court on August 8, which regulates the rates charged to businesses, payment processors, other operators, and issuers for their transactions, given Transbank’s dominant position in the market. Transbank’s shareholder issuing banks are 7 Chilean banks plus Spain-owned Santander, Brazil-owned Itaú Corpbanca, and the Chilean branch of JP Morgan Chase Bank.

In October 2022, the TDLC approved remedies agreed upon by Claro and VTR (owned by Mexican América Móvil and U.S. Liberty holdings, respectively) with the FNE to mitigate the risks to competition arising from the companies’ joint venture for developing new internet, TV, landline and mobile phone services. The approved mitigation measures include the return of radio spectrum, requirements to more efficiently use of spectrum, and the sale of Claro’s satellite television business.

In December 2022, the FNE approved the acquisition of Activision Blizzard, Inc (ABK) by Microsoft Corporation, after ruling out the risk of substantially reducing competition in the videogame development, publishing, and distribution segments, considering that their activities overlap both horizontally and vertically; the competitive pressure from other market actors; and Chilean videogame consumers preferences.

Expropriation and Compensation

Chilean law grants the government authority to expropriate property, including property of foreign investors, only on public interest or national interest grounds, on a non-discriminatory basis and in accordance with due process. The government has not nationalized a private firm since 1973. Expropriations of private land take place in a transparent manner, and typically only when the purpose is to build roads or other types of infrastructure. The law requires the payment of immediate compensation at fair market value, in addition to any applicable interest.

Dispute Settlement

ICSID Convention and New York Convention

Since 1991, Chile has been a member state to the International Center for the Settlement of Investment Disputes (ICSID Convention). In 1975, Chile became a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention).

National arbitration law in Chile includes the Civil Procedure Code (Law Num. 1552, modified by Law Num. 20.217 of 2007), and the Law Num. 19.971 on International Commercial Arbitration.

Investor-State Dispute Settlement

Apart from the New York Convention, Chile is also a party to the Pan-American Convention on Private International Law (Bustamante Code) since 1934, the Inter-American Convention on International Commercial Arbitration (Panama Convention) since 1976, and the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States since 1992.

The U.S.-Chile FTA, in force since 2004, includes an investment chapter that provides the right for investors to submit claims under the ICSID Convention, the United Nations Commission on International Trade Law (UNCITRAL) arbitration rules, or any other mutually agreed upon arbitral institution. Under the U.S.-Chile FTA, companies have the option to initiate a claim if they do not achieve a resolution in a previous consultations process with the Chilean government. So far, U.S. investors have filed no claims under the agreement but, in two recent cases, they initiated a consultation process.

Over the past 10 years, there were only four investment dispute cases brought by foreign investors against the state of Chile before the World Bank’s International Center for Settlement of Investment Disputes (ICSID) tribunal. Two more cases pending resolution were brought by foreign investors in 2021.

Local courts respect and enforce foreign arbitration awards, and there is no history of extrajudicial action against foreign investors.

International Commercial Arbitration and Foreign Courts

Mediation and binding arbitration exist in Chile as alternative dispute resolution mechanisms. A suit may also be brought in court under expedited procedures involving the abrogation of constitutional rights. The U.S.-Chile FTA investment chapter encourages consultations or negotiations before recourse to dispute settlement mechanisms. If the parties fail to resolve the matter, the investor may submit a claim for arbitration. Provisions in Section C of the FTA ensure that the proceedings are transparent by requiring that all documents submitted to or issued by the tribunal be available to the public, and by stipulating that the proceedings be public. The FTA investment chapter establishes clear and specific terms for making proceedings more efficient and avoiding frivolous claims. Chilean law is generally to be applied to all contracts. However, arbitral tribunals decide disputes in accordance with FTA obligations and applicable international law. The tribunal must also accept amicus curiae submissions.

In Chile, the Judiciary Code and the Code of Civil Procedure govern domestic arbitration. Local courts respect and enforce foreign arbitral awards and judgments of foreign courts. Chile has a dual arbitration system in terms of regulation, meaning that different bodies of law govern domestic and international arbitration. International commercial arbitration is governed by the International Commercial Arbitration Act that is modeled on the 1985 UNCITRAL Model Law on International Commercial Arbitration. In addition to this statute, there is also Decree Law Number 2349 that regulates International Contracts for the Public Sector and sets forth a specific legal framework for the State and its entities to submit their disputes to international arbitration.

No Chilean state-owned enterprises (SOEs) have been involved in investment disputes in recent decades. A Chilean government agency filed an arbitration case in February 2021 against a U.S. firm at the International Chamber of Commerce International Court of Arbitration. The case remains pending.

Bankruptcy Regulations

Chile’s Insolvency Law from 1982 was updated in October 2014. The current law aims to clarify and simplify liquidation and reorganization procedures for businesses to prevent criminalizing bankruptcy. It also established the new Superintendence of Insolvency and created specialized insolvency courts. Creditors’ approval is required to select the insolvency representative and to sell debtors’ substantial assets. The creditor also has the right to object to decisions accepting or rejecting creditors’ claims. However, the creditor cannot request information from the insolvency representative. The creditor may file for insolvency of the debtor, but for liquidation purposes only. The creditors are divided into classes for the purposes of voting on the reorganization plan; each class votes separately, and creditors in the same class are treated equally.

Investment Incentives

The Chilean government generally does not subsidize foreign investment, nor does it issue guarantees or joint financing for FDI projects. There are, however, some incentives in the Law 20,655 or Remote Areas Law, aimed to accelerate the development of certain Chilean regions in the extreme north and south of the country. These benefits include investment tax credits and subsidies to the hiring of workers who reside permanently in those regions. Law 20,241 of 2008 establishes a tax benefit for investment in research and development (R&D). The 2020 Tax Reform, contained in Law 21,210, establishes a Value Added Tax (VAT) exemption on imports of capital goods, and Decree Law Nº 825 establishes a VAT exemption on export services Other important incentives in Chilean laws include accelerated depreciation accounting for tax purposes and legal guarantees for remitting profits and capital. Additionally, the Start-Up Chile program provides selected entrepreneurs with grants of up to US$ 80,000, along with a Chilean work visa to develop a “startup” business in Chile over a period of four to seven months. Chile has other special incentive programs aimed at promoting investment and employment in remote regions, as well as other areas that suffer development lags.

Foreign Trade Zones/Free Ports/Trade Facilitation

Chile has two free trade zones: one in the northern port city of Iquique (Tarapaca Region) and the other in the far south port city of Punta Arenas (Magallanes Region). Merchants and manufacturers in these zones are exempt from corporate income tax, value added taxes (VAT) – on operations and services that take place inside the free trade zone – and customs duties. The same exemptions also apply to manufacturers in the Chacalluta and Las Americas Industrial Park in Arica (Arica and Parinacota Region). Mining, fishing, and financial services are not eligible for free zone concessions. Foreign-owned firms have the same investment opportunities in these zones as Chilean firms. The process for setting up a subsidiary is the same inside as outside the zones, regardless of whether the company is domestic or foreign owned.

Performance and Data Localization Requirements

Chile does not follow “forced localization.” A draft bill that is pending in Chile’s Congress could result in additional requirements (owner’s consent) for international data transfers in cases involving jurisdictions with data protection regimes below Chile’s standards. The bill, modeled after the European Union’s General Data Protection Regulation (GDPR) also proposes the creation of an independent Chilean Data Protection Agency that would be responsible for enforcing data protection standards.

Neither Chile’s Foreign Investment Promotion Agency nor the Central Bank applies performance requirements in their reviews of proposed investment projects. The investment chapter in the U.S.–Chile FTA establishes rules prohibiting performance requirements that apply to all investments, whether by a third party or domestic investors. The FTA investment chapter also regulates the use of mandatory performance requirements as a condition for receiving incentives and spells out certain exceptions. These include government procurement, qualifications for export and foreign aid programs, and non-discriminatory health, safety, and environmental requirements.

Chile does not apply requirements for foreign IT providers to turn over source code and/or provide access to encryption, nor there are restrictions for the free transmission of customer or business-related data outside the country. There are no local data storage requirements.

Real Property

Property rights and interests are recognized and generally enforced in Chile. There is a recognized and generally reliable system for recording mortgages and other forms of liens.

There are no restrictions on foreign ownership of buildings and land, and no time limit on the property rights acquired by them. The only exception, based on national security grounds, is for land and real estate located in border territories, defined as those up to a distance of ten kilometers from the land border and five kilometers from the coast which may not be owned by nationals or firms from neighboring countries, except for some cases authorized by the President of Chile through a supreme decree founded on reasons of national interest or a favorable report from the Under Secretary for the Navy. There are no restrictions to foreign and/or non-resident investors regarding land leases or acquisitions.

Unoccupied properties can always be claimed by their legal owners and, as usurpation is a criminal offense, several kinds of eviction procedures are allowed by the law, though they can sometimes be onerous and lengthy.

Intellectual Property Rights

Since 2007, Chile has been on the Special 301 Priority Watch List (PWL). According to the U.S. Chamber of Commerce’s International IP Index, Chile’s legal framework provides for fair and transparent use of compulsory licensing; extends necessary exclusive rights to copyright holders and maintains a voluntary notification system; and provides for civil and procedural remedies. However, IP protection challenges remain. Chile’s framework for trade secret protection has been deemed insufficient by private stakeholders. Pharmaceutical products suffer from relatively weak patenting procedures, the absence of an effective patent enforcement and resolution mechanism, and some gaps in regulation governing data protection.

A reform bill on Chile’s pharmaceutical drugs law called “Ley de Fármacos II” is set for its final review by a mixed committee of Congress to reconcile conflicting amendments made by the Senate and the Lower Chamber since its introduction to Congress in 2018. While the pharmaceutical industry reports that the reconciliation process addressed some of their concerns regarding the new regulations, it identified the lack of coverage being offered in price regulations as an outstanding issue of concern. Due to deadlock in Congress, the finalization of the bill has been indefinitely postponed.

A new legislation that modernizes certain aspects of Chile’s patent and IP regime – Ley Corta 21,335 – entered into force on January 5, 2022. The new law modernizes procedures for industrial designs and trademarks registration; criminalizes trademark falsification with stronger fines and introducing prison terms of up to three years; introduces provisional patents, so that innovators can initiate a patent registration procedure while being afforded 12 months to gather necessary information; strengthens patent enforcement measures, allowing affected patent owners to request the transfer of an infringing registered patent and not only its annulment; and broadens the definition of trade secrets.

On February 7, 2022, the new Law 21.426 against trade in illicit and counterfeit goods, with a focus on disrupting organized criminal activity, entered into force. The scope of the law covers counterfeiting, the reproduction or unauthorized sale of literary, artistic, and scientific works protected by IPR, as well as phonograms, videos, phonographic records, cassettes, videocassettes, films or motion pictures, and computer programs.

The Intellectual Property Brigade (BRIDEPI) of the Chilean Investigative Police (PDI) reported that it seized 1,487,231 counterfeit products in 2022, worth a total of US$ 6.5 million, and arrested 798 individuals on charges related to IPR infringement. Additionally, the National Customs Service reported that, between January and September 2022 (latest data available) it seized more than 8.9 million counterfeit products worth a total of US$ 40.8 million.

Chile’s IPR enforcement remains relatively lax, particularly in relation to piracy, copyright, and patent protection, while prosecution of IP infringement is hindered by gaps in the legal framework and a lack of expertise in IP law among judges. Rights holders indicate a need for greater resources devoted to customs operations and a better-defined procedure for dealing with small packages containing infringing goods. The legal basis for detaining and seizing suspected transshipments is also insufficiently clear.

In October 2018, Chile’s Congress successfully passed a law that criminalizes satellite piracy. In December 2021, the Ministry of Culture, Arts, and Heritage took positive action by introducing legislation in the Chilean Congress to implement a legal framework to penalize the circumvention of technology protection measures (TPM) by amending Chile’s existing IPR law. This legislation remains pending in Congress. However, other challenges remain, related to longstanding IPR issues under the U.S.-Chile FTA: the pending implementation of UPOV 91; the implementation of an effective patent linkage in connection with applications to market pharmaceutical products; adequate protection for undisclosed data generated to obtain marketing approval for pharmaceutical products; and amendments to Chile’s Internet Service Provider liability regime to permit effective action against Internet piracy.

Chile is not listed in the USTR’s Notorious Markets List. For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

Capital Markets and Portfolio Investment

Chile’s authorities are committed to developing capital markets and keeping them open to foreign portfolio investors. Foreign firms offer services in Chile in areas such as financial information, data processing, financial advisory services, portfolio management, voluntary saving plans and pension funds. Under the U.S.-Chile FTA, Chile opened significantly its insurance sector, with very limited exceptions. The Santiago Stock Exchange is Chile’s dominant stock exchange, and the third largest in Latin America. However, when compared to other OECD countries, it has lower market liquidity.

Existing policies facilitate the free flow of financial resources into Chile’s product and factor markets and adjustment to external shocks in a commodity export-dependent economy. Chile accepted the obligations of Article VIII (sections 2, 3 and 4) and maintains a free-floating exchange rate system, free of restrictions on payments and transfers for current international transactions. Credit is allocated on market terms and its various instruments are available to foreigners. The Central Bank of Chile (CBC) reserves the right to restrict foreign investors’ access to internal credit if a credit shortage exists. To date, this authority has not been exercised.

Money and Banking System

Chile is the Latin American country with the highest penetration of banking services: 87 percent of residents older than the age of 15 have a bank account. Nearly one fourth of Chileans have a credit card from a bank. Over 12 million credit cards have been issued and nearly one third of banking customers have a non-bank credit card. Financial inclusion has been promoted by the government through the state-owned Banco Estado: nearly 13.6 million people (more than 80 percent of Chilean residents) have a CuentaRut, which is a commission-free card with an electronic account available for all Chilean residents (national and foreigners) with a national ID number.

The Chilean banking system is healthy and competitive. The 2019 General Law of Banks (LGB) provides general guidelines for establishing a capital adequacy system in line with Basel III standards and gave the Financial Market Commission (CMF), the successor of the former Superintendence of Banks and Financial Institutions, the authority to establish its framework. All Chilean banks meet Basel III requirements, even though its implementation process is between December 2020 and December 1, 2025. The system’s liquidity position (Liquidity Coverage Ratio) is on average above 200 percent, more than twice the regulatory limit (100%). Capital adequacy ratio of the system was 15.6 percent as of December 2022 and remains robust even when including discounts due to market and/or operational risks. As of December 2023, non-performing loans (i.e., loans 90 days past due) were 1.69 percent compared to 1.25 percent in December 2022. This result was influenced by the end of the expansive fiscal and monetary policies implemented in 2021 in response to the economic shock from the COVID-19 pandemic, which injected significant liquidity into the economy, including legislation authorizing two rounds of withdrawals from pension accounts.

As of December 2023, the total assets of the Chilean banking system amounted to US$ 460.8 billion, according to the CMF. The largest six banks (Banco de Crédito e Inversiones, Banco Santander-Chile, Banco Estado, Banco de Chile, Scotiabank Chile and Itaú-Corpbanca) accounted for 87 percent of the system’s assets. Chile’s Central Bank conducts the country’s monetary policy, is constitutionally autonomous from the government, and is not subject to regulation by the CMF.

Foreign banks have an important presence in Chile, comprising three out of the six largest banks of the system. Out of 17 banks currently in Chile, five are foreign owned but legally established banks in Chile and three are branches of foreign banks. Both categories are subject to the requirements of the Chilean banking law and to supervision by the CMF. There are also 25 representative offices of foreign banks in Chile, six of them from the United States. There are no reports of correspondent banking relationships withdrawal in Chile.

To open a bank account in Chile, a foreigner must present his/her Chilean ID Card or passport, Chilean tax ID number, proof of address, proof of income/solvency, photo, and fingerprints.

Foreign Exchange and Remittances

Foreign Exchange

Law 20.848, which regulates FDI (described in section 1), prohibits arbitrary discrimination against foreign investors and guarantees access to the formal foreign exchange market, as well as the free remittance of capital and profits generated by investments. There are no other restrictions or limitations placed on foreign investors for the conversion, transfer or remittance of funds associated with an investment.

Investors, importers, and others are guaranteed access to foreign exchange in the official inter-bank currency market without restriction. The Central Bank of Chile (CBC) reserves the right to deny access to the inter-bank currency market for royalty payments in excess of five percent of sales. The same restriction applies to payments for the use of patents that exceed five percent of sales. In such cases, firms would have access to the informal market. The Chilean tax service reserves the right to prevent royalties of over five percent of sales from being counted as expenses for domestic tax purposes.

Chile has had a free floating (flexible) exchange rate system since 1999. Exchange rates of foreign currencies are fully determined by the market. The CBC reserves the right to intervene under exceptional circumstances to correct significant deviations of the currency from its fundamentals. These interventions are not designed to maintain a determined exchange rate level, which results from the currency market supply and demand, but instead aim to preserve financial stability when there is an excessive volatility in the foreign exchange market. This authority has been used seven times since 1999, the latest being an announcement in July 2022 when the CBC injected US$ 25 billion into the foreign exchange market following an unusual depreciation of the Chilean peso (CLP) due to external shocks.

Remittance Policies

Remittances of profits generated by investments are allowed at any time after tax obligations are fulfilled; remittances of capital can be made after one year following the date of entry into the country. In practice, this permanency requirement does not constitute a restriction for productive investment, because projects normally need more than one year to mature. Under the investment chapter of the U.S.–Chile FTA, the parties must allow free transfer and without delay of covered investments into and out of its territory. These include transfers of profits, royalties, sales proceeds, and other remittances related to the investment. However, for certain types of short-term capital flows this chapter allows Chile to impose transfer restrictions for up to 12 months as long as those restrictions do not substantially impede transfers. If restrictions are found to impede transfers substantially, damages accrue from the date of the initiation of the measure. In practice, these restrictions have not been applied in the last two decades.

Sovereign Wealth Funds

The Government of Chile maintains two sovereign wealth funds (SWFs) built with savings from years with fiscal surpluses. The Economic and Social Stabilization Fund (FEES) was established in 2007 and was valued at US$ 7.7 billion as of January 2023. The purpose of the FEES is to fund public debt payments and temporary deficit spending to keep a countercyclical fiscal policy. The Pensions Reserve Fund (FRP) was built up in 2006 and amounted to US$ 6.8 billion as of January 2023. The purpose of the FRP is to anticipate future needs of payments to those eligible to receive pensions, but whose contributions to the private pension system fall below a minimum threshold.

Chile is a member of the International Working Group of Sovereign Wealth Funds (IWG) and adheres to the Santiago Principles.

Chile’s government policy is to invest SWFs entirely abroad into instruments denominated in foreign currencies, including sovereign bonds and related instruments, corporate and high-yield bonds, mortgage-backed securities from U.S. agencies, and stocks. 39.8 percent of the FEES (US$ 3.1 billion), as well as 48.0 percent of the FRP (US$ 3.2 billion), were invested in assets based in the United States as of January 2023.

Privatization Program

Chile does not have a privatization program.

Additional Resources

Department of State

• Country Reports on Human Rights Practices;
• Trafficking in Persons Report;
• Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities;
• U.S. National Contact Point for the OECD Guidelines for Multinational Enterprises; and;
• Xinjiang Supply Chain Business Advisory 

Department of the Treasury

• OFAC Recent Actions 

Department of Labor

• Findings on the Worst Forms of Child Labor Report ;
• List of Goods Produced by Child Labor or Forced Labor ;
• Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World  and;
• Comply Chain 

Climate Issues

Chile is one of the signatories of the Paris Agreement. The Environment Ministry published its 2050 Long-Term Climate Strategy (ECLP), a roadmap that details how Chile will fulfill its commitments, considering a 30-year timeframe. It was incorporated into the Law 21.455, known as Framework Law of Climate Change, enacted on June 13, 2022. The law also includes the Nationally Determined Contribution (NDC), which contains Chile’s commitments to the international community in mitigation and adaptation to climate change, which will be updated every five years.

The main policy measures introduced by the government belong to six categories: sustainable industry and mining; green hydrogen production; sustainable construction of housing and public/commercial buildings; electromobility in the public transport system; phasing out coal-fired power generation plants; and other energy efficiency measures.

Under the Framework Law of Climate Change, the Environment Ministry will be responsible for drawing up an emissions mitigation plan with limits for each productive sector. There will be specific strategies and goals for the main sectors contributing to greenhouse gas emissions, some of them already in place. These will include: in the energy sector, phasing out coal-based power generation plants, with an aim to have closed 18 plants by 2025 and all of them by 2040; in the mining sector, reduction of greenhouse gas emissions to a minimum level by 2050 under the ECLP (both for emissions generated from the extraction and production processes, and indirectly, such as from electric power consumption); in the agricultural sector, Chile adhered to the COP26 goal to reduce methane (CH4) emissions by 30% by 2030.

An emissions compensation mechanism was introduced in 2020 for companies that pay green taxes, which are currently applied to emissions of particulate matter, sulfur dioxide, nitrogen oxide and carbon dioxide. This mechanism created a regulated carbon market, which allows industries to reduce their tax burden by financing emission reduction or emission absorption projects carried out by NGOs, foundations, or other institutions. Some examples of projects that can use this mechanism include energy efficiency initiatives, heater replacement, clean transportation, and reforestation.

There is an incipient incorporation of environmental considerations into public procurement. In 2012, the government published the Socially Responsible Purchasing Policy, which contained strategic sustainability guidelines, which are non-binding recommendations. In 2016, the Ministry of the Environment launched a public procurement policy with environmental criteria, both for the bidder’s operations and the characteristics of the products purchased.

Resources to Report Corruption

David Ibaceta Medina
Director General
Consejo para la Transparencia
Morande 360 piso 7
(+56)-(2)-2495-2000
contacto@consejotransparencia.cl

Maria Jaraquemada
Executive Director
Chile Transparente (Chile branch of Transparency International)
Perez Valenzuela 1687, piso 1, Providencia, Santiago, Chile
(+56)-(2)-2236 4507
chiletransparente@chiletransparente.cl

Octavio Del Favero
Executive Director
Ciudadania Inteligente
Holanda 895, Providencia, Santiago, Chile
(+56)-(2)-2419-2770
https://ciudadaniai.org/contact

Pía Mundaca
Executive Director
Espacio Publico
Santa Lucía 188, piso 7, Santiago, Chile
T: (+56) (9) 6258 3871
contacto@espaciopublico.cl

Observatorio Anticorrupción (Run by Espacio Publico and Ciudadania Inteligente)
https://observatorioanticorrupcion.cl/

Orlando Rojas
Executive Director
Observatorio Fiscal (focused on public spending)
Don Carlos 2983, Oficina 3, Las Condes, Santiago, Chile
(+562) (2) 4572 975
contacto@observatoriofiscal.cl