Chile VAT

Table of Contents:

1. What is VAT?
2. Who has to pay VAT?
3. Why am I being charged VAT?
4. What is a TAX ID Number?
5. What happens if I do not have a Tax ID Number?
6. How does Murf determine which customers Chilean VAT applies to?
7. Is there any threshold for VAT on electronically supplied services (ESS)?
8. Are there any special exemptions applicable for charities under which VAT may not be charged?
9. Does Murf provide VAT-exempt services or services that are not subject to VAT?
10. Are there any VAT obligations for me as a customer?Does Murf provide VAT-exempt services or services that are not subject to VAT?
11. What if I carry out activities subject to VAT in Chile and forget to provide a Chilean Tax ID Number?

What is VAT?

VAT is the abbreviation of Value Added Tax. VAT is generally due when goods and/or services are sold. It applies to most goods and services that are bought and sold for use or consumption in Chile. It is a consumption tax because it is ultimately borne by the final consumer.

Who must pay VAT?

Generally, VAT is invoiced by the supplier selling goods or services and collected from the customer. Subsequently, the supplier reports and remits the collected VAT to the tax authorities.

Where electronically supplied services (ESS) are provided by a supplier that is non-resident in Chile (as is the case for Murf), the responsibility to collect and remit VAT depends on whether the customer carries out activities that are subject to VAT in Chile.

If the customer does not carry out activities that are subject to VAT in Chile (i.e., individuals and legal entities that are not subject to VAT on their activities), VAT shall be collected on the supplies made to the customer by Murf. If the customer carries out activities that are subject to VAT in Chile (this could be both individuals and legal entities), VAT shall be self-assessed under the reverse charge mechanism by the customer.

Why am I being charged VAT?

Under Chilean VAT rules, Murf is required to collect and remit Chilean VAT on services provided to customers who do not carry out activities that are subject to VAT in Chile.

Customers who carry out activities that are subject to VAT in Chile may need to self-assess VAT on the services purchased from Murf.

What is a TAX ID Number?

A Tax ID Number is a unique 9-digit number (XX.XXX.XXX-X) that identifies a person or entity as being registered for VAT and other tax purposes in Chile.

What happens if I do not have a Tax ID Number?

If a customer in Chile is unable to supply a valid Tax ID Number that indicates they carry out activities in Chile that are subject to VAT, Murf will charge and collect Chilean VAT on its supplies.

How does Murf determine which customers Chilean VAT applies to?

Murf will treat customers with a "Sold To" address in Chile as being resident in Chile. This information may be cross-referenced against other data to verify that the "Sold To" country is accurate.

It is the customer's responsibility to ensure that their "Sold To" address is accurate.

Is there any threshold for VAT on electronically supplied services (ESS)?

No. VAT applies to all sales of Murf services in Chile where the customer does not carry out activities that are subject to VAT in Chile.

Are there any special exemptions applicable for charities under which VAT may not be charged?

No. VAT will be charged on all supplies made to charities unless the customer provides a valid Tax ID Number and that Tax ID Number indicates that their activities are subject to VAT in Chile.

Does Murf provide VAT exempt services or services that are not subject to VAT?

Customers who provide evidence that they carry out activities that are subject to VAT in Chile will not be charged VAT by Murf. There are currently no other exemptions available.

Customers who carry out activities that are subject to VAT in Chile may be required to self-assess VAT on the services purchased from Murf.

Are there any VAT obligations for me as a customer?

Customers who carry out activities that are subject to VAT in Chile may need to self-assess VAT on the services purchased from Murf.

If you provide a valid Tax ID Number indicating that you carry out activities that are subject to VAT in Chile, no VAT will be charged to you.

You are required to notify Murf if there is a change in your VAT status.

What if I carry out activities subject to VAT in Chile and forget to provide a Chilean Tax ID Number?

If you provide a valid Tax ID Number before your next invoice is issued and it indicates that you carry out activities subject to VAT in Chile, VAT will not be charged on future invoices.

Where VAT has been charged on previous invoices because a valid Chilean Tax ID Number was not provided, Murf may not be able to refund the VAT charged, as VAT was correctly applied at the time of supply. For guidance regarding VAT recovery or credits, please contact the Chilean Internal Revenue Service (SII) or a qualified tax advisor.