Economy Profile of Chile

Ease of Doing Business in Chile

ease of doing business in chile

Rankings on Doing Business topics – Chile

rankings on doing business topics chile

Topic Scores

topic scores chile

Starting a Business

This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and formally operate in each economy’s largest business city.

To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators.

The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure

Procedures to legally start and formally operate a company (number)

  • Preregistration (for example, name verification or reservation, notarization)

  • Registration in the economy’s largest business city

  • Postregistration (for example, social security registration, company seal)

  • Obtaining approval from spouse to start a business or to leave the home to register the company

  • Obtaining any gender specific document for company registration and operation or national identification card

Time required to complete each procedure (calendar days)

  • Does not include time spent gathering information

  • Each procedure starts on a separate day (2 procedures cannot start on the same day)

  • Procedures fully completed online are recorded as ½ day

  • Procedure is considered completed once final document is received

  • No prior contact with officials

Cost required to complete each procedure (% of income per capita)

  • Official costs only, no bribes

  • No professional fees unless services required by law or commonly used in practice

Paid-in minimum capital (% of income per capita)

  • Funds deposited in a bank or with third party before registration or up to 3 months after incorporation

To make the data comparable across economies, several assumptions about the business and the procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes.

The business:

-Is a limited liability company (or its legal equivalent). If there is more than one type of limited liability company in the economy, the limited liability form most common among domestic firms is chosen. Information on the most common form is obtained from incorporation lawyers or the statistical office.

-Operates in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.

-Performs general industrial or commercial activities such as the production or sale to the public of goods or services. The business does not perform foreign trade activities and does not handle products subject to a special tax regime, for example, liquor or tobacco. It is not using heavily polluting production processes.

-Does not qualify for investment incentives or any special benefits.

-Is 100% domestically owned.

-Has five business owners, none of whom is a legal entity. One business owner holds 30% of the company shares, two owners have 20% of shares each, and two owners have 15% of shares each.

-Is managed by one local director.

-Has between 10 and 50 employees one month after the commencement of operations, all of them domestic nationals.

-Has start-up capital of 10 times income per capita.

-Has an estimated turnover of at least 100 times income per capita.

-Leases the commercial plant or offices and is not a proprietor of real estate.

-Has an annual lease for the office space equivalent to one income per capita.

-Is in an office space of approximately 929 square meters (10,000 square feet).

-Has a company deed that is 10 pages long.

The owners:

-Have reached the legal age of majority and are capable of making decisions as an adult. If there is no legal age of majority, they are assumed to be 30 years old.

-Are in good health and have no criminal record.

-Are married, the marriage is monogamous and registered with the authorities.

-Where the answer differs according to the legal system applicable to the woman or man in question (as may be the case in economies where there is legal plurality), the answer used will be the one that applies to the majority of the population.

Starting a Business – Chile

starting a business chile

Figure – Starting a Business in Chile – Score

figure starting a business in chile score

Figure – Starting a Business in Chile and comparator economies – Ranking and Score

DB 2020 Starting a Business Score

figure starting a business in chile and comparator economies ranking and score

Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators.

Figure – Starting a Business in Chile – Procedure, Time and Cost

figure starting a business in chile procedure time and cost

* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below.

Details – Starting a Business in Chile – Procedure, Time and Cost

1 Draft online the articles of association and obtain an authentication number

Agency : Registro de Empresas y Sociedades

Entrepreneurs can draft the articles of association online by completing a form that will be submitted throught the Registry of Enterprises and Companies (www.tuempresaenundia.cl). The system will then deliver an authorization number. With this number, the entrepreneur will visit the notary to obtain a digital signature.

Less than one day

(online procedure)

no charge

2 Register the company with the Registro de Empresas y Sociedades

Agency : Registro de Empresas y Sociedades

3 Give notice of initiation of activities to the Internal Revenue Service online

Agency : Internal Revenue Service

Entrepreneurs must submit an "initiation of activities" ("Inicio de Actividades") form before the Chilean IRS, which is a sworn statement submitted to inform that the taxpayer will start to develop economical activities in Chile. The procedure can be carried out through the Chilean IRS website (www.sii.cl).

Less than one day

(online procedure)

no charge

Entrepreneurs can register online (www.tuempresaenundia.cl) at no cost. The system allows users to register (modify, cancel, etc.) a company online, at zero cost. The system provides the certificate of existence immediately, and it automatically assigns a tax payer ID number to the company. The system will require that all partners subscribing the document have an advanced electronic signature (a token), or that they do the process with a notary that uses his own advanced electronic signature.

Less than one day (online procedure)

UF 0,26

4 Obtain a digital certificate to enable the issuance of tax documents before the Internal Revenue Service

Agency : Company approved by the Internal Revenue Service

The digital certificate of an electronic signature certifies the relationship between the signatory or the owner of the certificate.

Law No. 20.727 which Modifies Tax Law Regarding the Electronic Invoice and Establishes other Measures, (2014), replaced the use of paper documents for electronic documents. As of 2018, the documents that must be issued or completed online by a company include: invoices, purchase invoices, liquidations of invoices, credit and debit notes, accountant registries. The digital certificate allows companies to pay taxes online with the Internal Revenue Service (http://www.sii.cl).

Companies must request the issuance of a certificate from one of the suppliers approved by the Internal Revenue Service which are:

  • Acepta (www.acepta.com)

  • E-CertChile Cámara de Comercio de Santiago (www.e-certchile.cl)

  • E-Sign (www.e-sign.cl)

  • Certinet (www.certinet.cl

  • Paperless (www.paperlessla.com)

Less than one day (online procedure)

Between CLP 12,000 and CLP 17,000

5 Obtain a Business License (Patente Comercial) from the Municipality

Agency : Municipality

A Business License (Patente Comercial) must be obtained upon business start-up and then renewed on a yearly basis. The request to obtain the patente is presented through a form, along with the Tax ID (RUT) and the company's articles of association. The fee to obtain the patente varies per Municipality, between 0.25% and 0.5% of the company's start-up capital, as per Decree 2,385 of 1996.

Decree Law 3063/1979 rules that any profession, activity, industry, commerce, art, or any other profitable activity, independent of its denomination, must obtain a Business License from the Municipality. A separate license must be obtained from the corresponding municipality for each of the enterprise’s establishments, offices, warehouses, and so forth.

Register with the labor-related accident insurance (Seguro Social contra Riesgos de Accidentes del Trabajo y Enfermedades Profesionales)

Agency : Labor Insurance (Mutuales de Seguridad)

According to Law 16.744 (article 15), it is mandatory for the employer to pay an insurance which covers work related accidents and professional illnesses. Entrepreneurs have the option to pay the insurance to the public Institute of Occupational Safety (Instituto de Seguridad Laboral (ISL), former Instituto de Normalización Previsional) or to private nonprofit entities known as Mutuales. In Chile, there are three private Mutuales:

  • Asociación Chilena de Seguridad.

  • Mutual de Seguridad de la Cámara Chilena de Construcción. de la construcción.

  • Instituto de Seguridad del Trabajo.

1 day, simultaneous with previous procedure

1 day, simultaneous with previous procedure

between 0.25% and 0.5% of the company's start-up capital

no charge

Dealing with Construction Permits

This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of data collection was completed in May 2019. See the methodology for more information

What the indicators measure

Procedures to legally build a warehouse (number)

  • Submitting all relevant documents and obtaining all necessary clearances, licenses, permits and certificates

  • Submitting all required notifications and receiving all necessary inspections

  • Obtaining utility connections for water and sewerage

  • Registering and selling the warehouse after its completion

Time required to complete each procedure (calendar days)

  • Does not include time spent gathering information

  • Each procedure starts on a separate day—though procedures that can be fully completed online are an exception to this rule

  • Procedure is considered completed once final document is received

  • No prior contact with officials

Cost required to complete each procedure (% of income per capita)

  • Official costs only, no bribes

Building quality control index (0-15)

  • Quality of building regulations (0-2)

  • Quality control before construction (0-1)

  • Quality control during construction (0-3)

  • Quality control after construction (0-3)

  • Liability and insurance regimes (0-2)

  • Professional certifications (0-4)

To make the data comparable across economies, several assumptions about the construction company, the warehouse project and the utility connections are used.

The construction company (BuildCo):

  • Is a limited liability company (or its legal equivalent) and operates in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.

  • Is 100% domestically and privately owned; has five owners, none of whom is a legal entity. Has a licensed architect and a licensed engineer, both registered with the local association of architects or engineers. BuildCo is not assumed to have any other employees who are technical or licensed experts, such as geological or topographical experts.

  • Owns the land on which the warehouse will be built and will sell the warehouse upon its completion.

The warehouse:

  • Will be used for general storage activities, such as storage of books or stationery.

  • Will have two stories, both above ground, with a total constructed area of approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 meters (9 feet, 10 inches) high and will be located on a land plot of approximately 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the warehouse is valued at 50 times income per capita.

  • Will have complete architectural and technical plans prepared by a licensed architect. If preparation of the plans requires such steps as obtaining further documentation or getting prior approvals from external agencies, these are counted as procedures.

  • Will take 30 weeks to construct (excluding all delays due to administrative and regulatory requirements).

The water and sewerage connections:

  • Will be 150 meters (492 feet) from the existing water source and sewer tap. If there is no water delivery infrastructure in the economy, a borehole will be dug. If there is no sewerage infrastructure, a septic tank in the smallest size available will be installed or built.

  • Will have an average water use of 662 liters (175 gallons) a day and an average wastewater flow of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and a peak wastewater flow of 1,136 liters (300 gallons) a day.

  • Will have a constant level of water demand and wastewater flow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection.

Dealing with Construction Permits – Chile

dealing with construction permits chile

Figure – Dealing with Construction Permits in Chile – Score

figure dealing with construction permits in chile score

Figure – Dealing with Construction Permits in Chile and comparator economies – Ranking and Score

DB 2020 Dealing with Construction Permits Score

figure dealing with construction permits in chile and comparator economies ranking and score

Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators.

Figure – Dealing with Construction Permits in Chile – Procedure, Time and Cost

figure dealing with construction permits in chile procedure time and cost

* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below.

Figure – Dealing with Construction Permits in Chile and comparator economies – Measure of Quality

figure dealing with construction permits in chile and comparator economies measure of quality

Details – Dealing with Construction Permits in Chile – Procedure, Time and Cost

1 Request and obtain indication on water and sewage availability with Sanitation Company

Agency : Sanitation Company

BuildCo. requests the availability from the utility company in order to install their services.

2 Obtain results of geotechnical study / soil test

BuildCo will request a soil test for the structural calculations for the foundation. Contractors ask for a soil test to ensure that the foundation of the building is solid. The engineer must understand the suitability of the soil for the proposed construction work. It allows to build a solid foundation and avoid structures to be damaged or collapsed or leaned.

30 days no charge

21 days CLP 3,500,000

3 Request and obtain preliminary information from the Municipality

Agency : Municipality

BuildCo. requests and obtains a "Certificado de Informaciones Previas" (background information), which entails zoning and planning information.

10 days CLP 18,000

4 Request and obtain risk assessment from the Regional Sanitary Authority (Secretaría Regional Ministerial de Salud (Seremi))

Agency : Regional Sanitary Authority (Secretaría Regional Ministerial de Salud (Seremi))

Once BuildCo obtained the clearance from the Sanitary Company (utilities) , BuildCo may now request a risk classification from the sanitary authority. The General Urbanism and Construction Ordinance of Chile (“Ordenanza General de Urbanismo y Construcciones) under Article 4.14.2 sets parameters for qualifying industrial or warehousing facilities into 4 categories: Dangerous, Unhealthy / Pollutant, Irritating or Harmless. Based on this Ordinance, warehousing or industrial establishments shall be assessed on a case by case basis by the respective Regional Sanitary Authority (“Secretaría Regional Ministerial (Seremi) de Salud”), taking into account the risks that the building may cause to their workers, neighborhood and community.

A warehouse such as the one in the Doing Business case study would likely be rated "Harmless" because it is used for storage of non-hazardous items such as books.

5 days CLP 16,000

5 Request and obtain water and sewerage supply certificate from Sanitation Company

Agency : Sanitation Company

Upon receiving the permit from the Regional Sanitary Authority (Secretaría Regional Ministerial de Salud (Seremi)), BuildCo submit this permit to the Municipality as a proof that water and sewerage connection can be obtained.

6 Request and obtain provisional installation permit from the Municipality

Agency : Municipality

In parallel with the interaction with the utility company, BuildCo, can request the possibility to have some services while the construction takes place. To obtain a provisional permit for installation of temporary facilities, BuildCo’s architects must meet the Municipality’s architects to review the drawings and designs. This permit enables BuildCo to have bathrooms, electricity, and so forth on the construction site.

15days no charge

Details – Dealing with Construction Permits in Chile – Measure of Quality

details dealing with construction permits in chile measure of quality

Getting Electricity

This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure

Procedures to obtain an electricity connection (number)

  • Submitting all relevant documents and obtaining all necessary clearances and permits

  • Completing all required notifications and receiving all necessary inspections

  • Obtaining external installation works and possibly purchasing material for these works

  • Concluding any necessary supply contract and obtaining final supply

Time required to complete each procedure (calendar days)

  • Is at least 1 calendar day

  • Each procedure starts on a separate day

  • Does not include time spent gathering information

  • Reflects the time spent in practice, with little follow-up and no prior contact with officials

Cost required to complete each procedure (% of income per capita)

  • Official costs only, no bribes

  • Value added tax excluded

The reliability of supply and transparency of tariffs index (0-8)

  • Duration and frequency of power outages (0–3)

  • Tools to monitor power outages (0–1)

  • Tools to restore power supply (0–1)

  • Regulatory monitoring of utilities’ performance (0–1)

  • Financial deterrents limiting outages (0–1)

  • Transparency and accessibility of tariffs (0–1)

To make the data comparable across economies, several assumptions about the warehouse, the electricity connection and the monthly consumption are used.

The warehouse:

  • Is owned by a local entrepreneur and is used for storage of goods.

  • Is located in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.

  • Is located in an area where similar warehouses are typically located and is in an area with no physical constraints. For example, the property is not near a railway.

  • Is a new construction and is being connected to electricity for the first time.

  • Has two stories with a total surface area of approximately 1,300.6 square meters (14,000 square feet). The plot of land on which it is built is 929 square meters (10,000 square feet).

The electricity connection:

  • Is a permanent one with a three-phase, four-wire Y connection with a subscribed capacity of 140- kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 kilowatt (kW).

  • Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution network and is either overhead or underground, whichever is more common in the area where the warehouse is located and requires works that involve the crossing of a 10-meter road (such as by excavation or overhead lines) but are all carried out on public land. There is no crossing of other owners’ private property because the warehouse has access to a road.

  • Does not require work to install the internal wiring of the warehouse. This has already been completed up to and including the customer’s service panel or switchboard and the meter base.

The monthly consumption:

  • It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 p.m. (8 hours a day), with equipment utilized at 80% of capacity on average and that there are no electricity cuts (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours (kWh); hourly consumption is 112 kWh.

  • If multiple electricity suppliers exist, the warehouse is served by the cheapest supplier.

  • Tariffs effective in January of the current year are used for calculation of the price of electricity for the warehouse. Although January has 31 days, for calculation purposes only 30 days are used.

Price based on monthly bill for commercial warehouse in case study

*Note: Doing Business measures the price of electricity, but it is not included in the ease of doing business score nor in the ranking on the ease of getting electricity.

Getting Electricity – Chile

getting electricity chile

Figure – Getting Electricity in Chile – Score

figure getting electricity in chile score

Figure – Getting Electricity in Chile and comparator economies – Ranking and Score

DB 2020 Getting Electricity Score

figure getting electricity in chile and comparator economies ranking and score

Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity.

Figure – Getting Electricity in Chile – Procedure, Time and Cost

figure getting electricity in chile Procedure time and cost

* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures

reflected here, see the summary below.

Figure – Getting Electricity in Chile and comparator economies – Measure of Quality

figure getting electricity in chile and comparator economies measure of quality

Details – Getting Electricity in Chile – Procedure, Time and Cost

1 Submit application to Enel Distribución Chile S.A. and await estimate

Agency : Enel Distribución Chile S.A.

The customer submits an application with Enel Distribución Chile S.A. in person. Based on the application Enel Distribución Chile S.A. will prepare a technical project for the connection and will issue an estimate of the costs. Enel Distribución Chile S.A. requires a number of supporting documents with the application:

15 calendar days

CLP 526,775.3

  • Address of the premise that is to be connected

  • Sketch of the location of the premise

  • Certificate of prior conditions ("Certificado de condiciones previas")

  • Construction plans detailing the layout of the floors (not needed for a warehouse)

  • Plan of the layout of infrastructure services (such as water and gas pipes) that might interfere with the civil works. Specifications of the type of connection required (overhead/underground, 1- or 3-phased, traditional or with a concentrador de medida)

  • Required load (in kW)

  • Type of consumption tariff requested, which can be for example AT-3, AT-4.3 if the metering is for medium voltage or BT-3, BT 4.3 if metering is for low voltage. The decision on which tariff to choose will depend on the consumption profile for the warehouse.

  • Coordinates of the customer (Name, tax registration number, bank account information, commercial address, telephone, legal representative)

  • Coordinates of the applicant (Name, tax registration number, bank account information, commercial address, telephone)

  • Coordinates of the contact person on the construction site to coordinate connection works.

  • Date by which the supply will be need to be turned on

  • In case that the maximum load will only be reached over time, indicate the a profile of the timeline

Receive external inspection by Enel Distribución Chile

Agency : Enel Distribución Chile S.A.

3 Sign supply contract before a notary

Agency : Notary

If the customer is the owner of a limited company, he has to sign the supply contract in front of a notary attesting to his role as the owner of the company.

1 calendar day

CLP 5,000

To sign the supply contract the following documents have to be submitted:

  • The declaration in front of the notary attesting to the fact that the customer is the owner of the building. If the owner is a company the declaration has to clarify the persons that are legally responsible for the actions of the company.

  • Certificate of the number of the relevant municipality (“Certificado de número Municipal”).

  • Copy of the identity document of the owner or legal representative of the company

  • Tax registration number (Rol Único Tributario – UT).

  • Coordinates of the person receiving the cost estimate for the connection and future consumption bills.

After receiving the application, Enel Distribución Chile S.A. will conduct an inspection in situ to identify the exact connection point.

3 calendar days CLP 0

4 Pay connection costs and await completion of connection works by Enel Distribución Chile S.A.

Agency : Enel Distribución Chile S.A.

The customer accepts the contract and submits the necessary supporting material such as the declaration in front of the notary and the power of attorney. For the finalization of the contract, the acceptance of the cost estimate has to be accepted and paid for and the inspection certificate issued by the "Superintendencia de Electricidad y Combustibles (SEC)" on the internal wiring (Anexo TE-1 SEC) has to be submitted.

The payment of the estimate can be done in one of the three offices of Enel Distribución Chile

S.A. determined for this purpose.

For 3-phase connections the metering material is included in connection tariff. Other items included in the tariff are current transformers and other material, inspections, approvals with the municipality and the civil works (excavation permit) needed for the connection. The price of the excavation permit to open a sidewalk (2 m width * 4 m long) for a period of 6 days in the town of Santiago is about 60,000 CLP.

Once the supply contract has been signed, Enel Distribución Chile S.A. will then carry out the actual connection works. Material for the connection is provided by Enel Distribución Chile S.A. and always available.

27 calendar days CLP 4,292,484.16

5 Receive meter installation and final connection

Agency : Enel Distribución Chile S.A.

The last step of the connection works (meter installation) can only be done after the internal wiring installation has been approved by the Superintendencia de Electricidad y Combustibles (SEC). A minimum delay of two weeks is needed for this step to allow SEC to inform the surrounding community of the cut in electricity in order to connect the new customer.

1 calendar day CLP 0

Takes place simultaneously with previous procedure.

Details – Getting Electricity in Chile – Measure of Quality

details getting electricity in chile measure of quality

Note:

If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index.

If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index.

Registering Property

This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure

Procedures to legally transfer title on immovable property (number)

  • Preregistration procedures (for example, checking for liens, notarizing sales agreement, paying property transfer taxes)

  • Registration procedures in the economy's largest business city.

  • Postregistration procedures (for example, filling title with municipality)

Time required to complete each procedure (calendar days)

  • Does not include time spent gathering information

  • Each procedure starts on a separate day – though procedures that can be fully completed online are an exception to this rule

  • Procedure is considered completed once final document is received

  • No prior contact with officials

Cost required to complete each procedure (% of property value)

  • Official costs only (such as administrative fees, duties and taxes).

  • Value Added Tax, Capital Gains Tax and illicit payments are excluded

Quality of land administration index (0-30)

  • Reliability of infrastructure index (0-8)

  • Transparency of information index (0–6)

  • Geographic coverage index (0–8)

  • Land dispute resolution index (0–8)

  • Equal access to property rights index (-2–0)

To make the data comparable across economies, several assumptions about the parties to the transaction, the property and the procedures are used.

The parties (buyer and seller):

  • Are limited liability companies (or the legal equivalent).

  • Are located in the periurban (that is, on the outskirts of the city but still within its official limits) area of the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.

  • Are 100% domestically and privately owned.

  • Perform general commercial activities.

The property (fully owned by the seller):

  • Has a value of 50 times income per capita, which equals the sale price.

  • Is fully owned by the seller.

  • Has no mortgages attached and has been under the same ownership for the past 10 years.

  • Is registered in the land registry or cadastre, or both, and is free of title disputes.

  • Is located in a periurban commercial zone (that is, on the outskirts of the city but still within its official limits), and no rezoning is required.

  • Consists of land and a building. The land area is 557.4 square meters (6,000 square feet). A two- story warehouse of 929 square meters (10,000 square feet) is located on the land. The warehouse is 10 years old, is in good condition, has no heating system and complies with all safety standards, building codes and legal requirements. The property, consisting of land and building, will be transferred in its entirety.

  • Will not be subject to renovations or additional construction following the purchase.

  • Has no trees, natural water sources, natural reserves or historical monuments of any kind.

  • Will not be used for special purposes, and no special permits, such as for residential use, industrial plants, waste storage or certain types of agricultural activities, are required.

  • Has no occupants, and no other party holds a legal interest in it.

Registering Property – Chile

registering property chile

Figure – Registering Property in Chile – Score

figure registering property in chile score

Figure – Registering Property in Chile and comparator economies – Ranking and Score

DB 2020 Registering Property Score

figure registering property in chile and comparator economies ranking and score

Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators.

Figure – Registering Property in Chile – Procedure, Time and Cost

figure registering property in chile procedure time and cost

* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below.

Figure – Registering Property in Chile and comparator economies – Measure of Quality

figure registering property in chile and comparator economies measure of quality

Details – Registering Property in Chile – Procedure, Time and Cost

1 The Lawyer drafts the sale and purchase agreement while carrying out due diligence research on the property and parties

Agency : Lawyer

A lawyer is contracted to conduct due diligence of the property’s legal history, for not less than 10 years. The lawyer will also obtain the documents described in Procedures 2-3 from the Property Registry and the Treasury, as well as undertake the registration formalities.

Lawyer fees for the study of the titles, drafting of the contract and completing all the formalities involved in the registration Procedure range between 1 and 2.5% of the transaction value. While it is not legally required to employ a lawyer for the study and the registration, it is common practice.

2 Request the folder of property titles for the past 10 years (it includes the certificate of encumbrances “GP” and the ‘Certificado de Vigencia’) from the Registry

Agency : Property Registry (Conservadores digitales)

3 Obtain evidence of complete payment of land tax from Treasury (Servicios de Tesorerías)

Agency : Treasury (Servicios de Tesorerías)

The Property Taxes Debt Certificated (Certificado de Deuda de Contribuciones) is granted by the Treasury (Tesorería General de la República) and can be requested online www.tesoreria.cl. This document certificates that the property does not have debts regarding property taxes. The Notary and Property Registry require the document for the execution of the public deed and the registration in the Real Estate Office.

Less than one day,

online

no charge

The folder of property titles for the past 10 years including the encumbrance certificate (certificado de Gravámenes y Prohibiciones), and the ‘Certificado de Vigencia’ can be obtained in a sole request at the official website of "conservadores digitales" (www.conservador.cl). The folder is usually requested by the lawyer responsible for the due diligence of the property. The folder is received by email within 5 days after request and payment online.

15 days CLP 4,896,253.45; (About

1% of transaction value)

5 days CLP 13,500

4 Execution and signing of the public deed

Agency : Public Notary office

5 Registration of the public deed at the Real Estate Office

Agency : Real Estate Office

According to the Judiciary Decree 588 of November 27, 1998, In the case of properties located in the cities of Santiago, Valparaíso and Viña del Mar the registration cost is 0.2% of the property value, being the maximum charge CLP 256.000 (property value of CLP 128.000.000). However, since the regulation dated since 1998, the amount has been updated accordingly in the past years. For 2019, It's estimated at CLP 262.200 (plus CLP 2.600 per copy)

11 days

The parties can request the transfer personally at the registry the property transfer or online at the http://www.cbrsantiago.cl/portall_cbr/ website . The Registry request at least the following documents for registration: (i) 2890 Form; (ii) Property Debt Tax Certificate; (iii) purchase agreement public deed and will check the payment of all taxes related to the property. The registry

has a digital record of all requests, but in the registry, all the transfer is done on paper.

CLP 264,800; (For

properties located in the cities of Santiago, Valparaíso and Viña del Mar the registration cost is 0.2% of the property value, being the maximum charge CLP 262.200 plus CLP 2.600 per copy (1 copy estimated))

The Registry provides the information of the transaction and the value of the property and taxes to the SII within the first ten days of the following month. The time limit for the registry’s decision is 2 days, and there is a 2-month period for the parties to amend any mistake.

Note: The registration time refers to the Registry in Santiago. Outside of Santiago, the time would be longer (up to 3 weeks).

Upon completion of the due diligence, the sale and purchase agreement is notarized. Both parties have to sign in front of a Notary. Jointly with the execution of the public deed, the Public Notary has the duty of complete the declaration about property transfer form (2890 Form). Two copies of this form are required in order to register the ownership transfer in the corresponding Property Registry. The Property Registry conserves one copy, and the other one is sent to the IRS (Servicio de Impuesto Internos) with the purpose of completing and updating the property fiscal cadaster.

2 days CLP 158,000; (CLP 30,000

(copies and other expenses at the Notary’s office) + 0.1% of property price with a maximum charge of CLP 128,000 (Notary’s fees))

6 Obtain a Property Certificate and a Mortgages and Ownership Limitations Certificate

Agency : Real Estate Office

Once the registration has been completed, it is recommended to obtain from the Conservador de Bienes Raíces de Santiago (the Real Estate Office) (i) a copy of the Property Certificate stating the new ownership, (ii) Mortgages and Ownership Limitations Certificate, stating the new ownership is clean.

While this procedure is not legally required, it ensures that all the information is correct. If the registration was done through the portal, the applicant can download the updated ownership certificate at the http://www.cbrsantiago.cl/portall_cbr/ website.

There is no need for title insurance in Chile since the Registrar and the Notaries must personally answer for their mistakes on their functions. They hire responsible insurance for these cases.

Outside of Santiago, it may take up to 2 weeks to obtain the title and certificates.

Less than one day,

online

no charge

Details – Registering Property in Chile – Measure of Quality

details registering property in chile measure of quality

Getting Credit

This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure

Strength of legal rights index (0–12)

  • Rights of borrowers and lenders through collateral laws (0-10)

  • Protection of secured creditors’ rights through bankruptcy laws (0-2)

Depth of credit information index (0–8)

  • Scope and accessibility of credit information distributed by credit bureaus and credit registries (0-8)

Credit bureau coverage (% of adults)

  • Number of individuals and firms listed in largest credit bureau as a percentage of adult population

Credit registry coverage (% of adults)

  • Number of individuals and firms listed in credit registry as a percentage of adult population

Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of indicators. The depth of credit information index measures rules and practices affecting the coverage, scope and accessibility of credit information available through a credit registry or a credit bureau. The strength of legal rights index measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first determined whether a unitary secured transactions system exists. Then two case scenarios, case A and case B, are used to determine how a nonpossessory security interest is created, publicized and enforced according to the law. Special emphasis is given to how the collateral registry operates (if registration of security interests is possible). The case scenarios involve a secured borrower, company ABC, and a secured lender, BizBank.

In some economies the legal framework for secured transactions will allow only case A or case B (not both) to apply. Both cases examine the same set of legal provisions relating to the use of movable collateral.

Several assumptions about the secured borrower (ABC) and lender (BizBank) are used:

  • ABC is a domestic limited liability company (or its legal equivalent).

  • ABC has up to 50 employees.

  • ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.

  • Both ABC and BizBank are 100% domestically owned.

The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests).

In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets.

getting credit chile figure getting credit in chile score figure getting credit in chile and comparator economies ranking and score figure legal rights in chile and comparator economies

Getting Credit – Chile

getting credit chile

Figure – Getting Credit in Chile – Score

figure getting credit in chile score

Figure – Getting Credit in Chile and comparator economies – Ranking and Score

DB 2020 Getting Credit Score

figure getting credit in chile and comparator economies ranking and score

Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index.

Figure – Legal Rights in Chile and comparator economies

figure legal rights in chile and comparator economies

Details – Legal Rights in Chile

image

Strength of legal rights index (0-12) 4

image

Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without requiring a specific description

of collateral?

No

Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional equivalents No to security interests in movable assets exist in the economy?

image

May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and replacements of the

original assets?

Yes

Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a specific description of collateral?

Yes

image

Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by asset type, with an

electronic database indexed by debtor's name?

Yes

Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties; and can the collateral agreement include a maximum amount for which the assets are encumbered?

Yes

Does a notice-based collateral registry exist in which all functional equivalents can be registered? No

Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed online by any interested third No party?

Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency procedure? No

Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? No

image

Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow the secured creditor to sell No the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt?

Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure? Does the law No protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it?

Figure – Credit Information in Chile and comparator economies

image

8

8

8

7

7

6.8

8.2

8

Index Score

7.8

7.6

7.4

7.2

7

6.8

6.6

6.4

6.2

6

Chile Argentina Brazil Paraguay Peru OECD

high income

image

Details – Credit Information in Chile

image

Depth of credit information index (0-8)

Credit bureau

Credit registry

Score

Are data on both firms and individuals distributed?

Yes

Yes

1

image

Are data from retailers or utility companies – in addition to data from banks and

financial institutions – distributed?

Yes

No

1

Are both positive and negative credit data distributed? No Yes 1

image

Are data on loan amounts below 1% of income per capita distributed?

Yes

Yes

1

Are at least 2 years of historical data distributed? (Credit bureaus and registries that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.)

No No 0

By law, do borrowers have the right to access their data in the credit bureau or credit registry?

Yes Yes 1

image

Can banks and financial institutions access borrowers’ credit information online (for example, through an online platform, a system-to-system connection or both)?

Yes Yes 1

image

Total Score ("yes" to either public bureau or private registry)

7

Are bureau or registry credit scores offered as a value-added service to help banks and financial institutions assess the creditworthiness of borrowers?

Yes No 1

image

Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0.

Coverage

Credit bureau

Credit registry

Number of individuals

5,365,370

7,379,981

Number of firms

280,589

198,260

Total

5,645,959

7,578,241

Percentage of adult population

44.0

59.1

image

Protecting Minority Investors

This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

image

What the indicators measure

Case study assumptions

  • Extent of disclosure index (0–10): Disclosure, review, and approval requirements for related-party transactions

  • Extent of director liability index (0–10): Ability of minority shareholders to sue and hold interested directors liable for prejudicial related-party transactions; Available legal

    remedies (damages, disgorgement of profits, disqualification from managerial position(s) for one year or more, rescission of the transaction)

  • Ease of shareholder suits index (0–10): Access to internal corporate documents; Evidence obtainable during trial and allocation of legal expenses

  • Extent of conflict of interest regulation index (0-30): Sum of the extent of disclosure, extent of director liability and ease of shareholder suits indices

  • Extent of shareholder rights index (0-6): Shareholders’ rights and role in major corporate decisions

  • Extent of ownership and control index (0-7): Governance safeguards protecting shareholders from undue board control and entrenchment

  • Extent of corporate transparency index (0-7): Corporate transparency on ownership stakes, compensation, audits and financial prospects

  • Extent of shareholder governance index (0–20): Sum of the extent of shareholders rights, extent of ownership and control and extent of corporate transparency indices

  • Strength of minority investor protection index (0–50): Sum of the extent of conflict of interest regulation and extent of shareholder governance indices

To make the data comparable across economies, a case study uses several assumptions about the business and the transaction.

The business (Buyer):

  • Is a publicly traded corporation listed on the economy’s most important stock exchange.

  • Has a board of directors and a chief executive officer (CEO) who may legally act on behalf of Buyer where permitted, even if this is not specifically required by law.

  • Has a supervisory board in economies with a two-tier board system on which Mr. James appointed 60% of the shareholder-elected members.

  • Has not adopted bylaws or articles of association that go beyond the minimum requirements. Does not follow codes, principles, recommendations or guidelines that are not mandatory.

  • Is a manufacturing company with its own distribution network.

    The transaction involves the following details:

  • Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two directors to Buyer’s five-member board.

  • Mr. James also owns 90% of Seller, a company that operates a chain of retail hardware stores. Seller recently closed a large number of its stores.

  • Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand Buyer’s distribution of its food products, a proposal to which Buyer agrees. The price is equal to 10% of Buyer’s assets and is higher than the market value.

  • The proposed transaction is part of the company’s principal activity and is not outside the authority of the company.

  • Buyer enters into the transaction. All required approvals are obtained, and all required disclosures made—that is, the transaction was not entered into fraudulently.

  • The transaction causes damages to Buyer. Shareholders sue Mr. James and the executives and directors that approved the transaction.

Protecting Minority Investors – Chile

image

Stock exchange information

Stock exchange

Santiago Stock Exchange

image

Listed firms with equity securities

92

Stock exchange URL http://www.bolsadesantiago.com

image

Indicator

Chile

OECD high income

Best Regulatory Performance

Extent of disclosure index (0-10)

8.0

6.5

10 (13 Economies)

City Covered Santiago

image

image

Ease of shareholder suits index (0-10)

7.0

7.3

10 (Djibouti)

Extent of director liability index (0-10) 6.0 5.3 10 (3 Economies)

image

Extent of ownership and control index (0-7)

4.0

4.5

7 (9 Economies)

Extent of shareholder rights index (0-6) 6.0 4.7 6 (19 Economies)

image

Figure – Protecting Minority in Chile – Score

image

66.0

Extent of corporate transparency index (0-7) 2.0 5.7 7 (13 Economies)

image

Score – Protecting Minority Investors

Figure – Protecting Minority Investors in Chile and comparator economies – Ranking and Score

DB 2020 Protecting Minority Investors Score

image

0 100

68.2: Regional Average (OECD high income) 68.0: Peru (Rank: 45)

66.0: Chile (Rank: 51)

62.0: Argentina (Rank: 61)

62.0: Brazil (Rank: 61)

34.0: Paraguay (Rank: 143)

Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index.

Figure – Protecting Minority Investors in Chile and comparator economies – Measure of Quality

image

image

image

2

6

8

4

6

7

5

2

7

5

6

6

6

8

5

4

4

4

0

5

6

0

6

5

6

9

2

6

6

5.6

5.6

6.6

4.3

4.5

7.4

Chile

Argentina

Brazil

Paraguay

Peru

OECD high income

0 5 10 15 20 25 30 35 40

Sub-Indicator Score

image

image

image

image

image

image

Extent of corporate transparency index (0-7) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-7) Extent of shareholder rights index (0-6) Ease of shareholder suits index (0-10)

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Details – Protecting Minority Investors in Chile – Measure of Quality

Answer

Score

Extent of conflict of interest regulation index (0-30)

Extent of disclosure index (0-10)

8.0

Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3)

Board of directors excluding interested members

2.0

Must an external body review the terms of the transaction before it takes place? (0-1)

No

0.0

Must Mr. James disclose his conflict of interest to the board of directors? (0-2)

Full disclosure of all material facts

2.0

Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2)

Disclosure on the transaction and on the conflict of interest

2.0

Must Buyer immediately disclose the transaction to the public? (0-2)

Disclosure on the transaction and on the conflict of interest

2.0

Extent of director liability index (0-10)

6.0

Can shareholders representing 10% of Buyer's share capital sue for the damage the transaction caused to Buyer? (0-1)

Yes

1.0

Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0-2)

Liable if negligent

1.0

Can shareholders hold the other directors liable for the damage the transaction caused to Buyer? (0-2)

Liable if negligent

1.0

Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by shareholders? (0-1)

Yes

1.0

Must Mr. James repay profits made from the transaction upon a successful claim by shareholders? (0-1)

Yes

1.0

Is Mr. James disqualified upon a successful claim by shareholders? (0-1)

Yes

1.0

Can a court void the transaction upon a successful claim by shareholders? (0-2)

Only in case of fraud or bad faith

0.0

Ease of shareholder suits index (0-10)

7.0

Before suing, can shareholders representing 10% of Buyer's share capital inspect the transaction documents? (0-1)

No

0.0

Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3)

Any relevant document

3.0

Can the plaintiff request categories of documents from the defendant without identifying specific ones? (0-1)

Yes

1.0

Can the plaintiff directly question the defendant and witnesses at trial? (0-2)

Preapproved questions only

1.0

Is the level of proof required for civil suits lower than that of criminal cases? (0-1)

Yes

1.0

Can shareholder plaintiffs recover their legal expenses from the company? (0-2)

Yes if successful

1.0

Extent of shareholder governance index (0-20)

Extent of shareholder rights index (0-6)

6.0

Does the sale of 51% of Buyer's assets require shareholder approval?

Yes

1.0

Can shareholders representing 10% of Buyer's share capital call for a meeting of shareholders?

Yes

1.0

Must Buyer obtain its shareholders’ approval every time it issues new shares?

Yes

1.0

Do shareholders automatically receive preemption rights every time Buyer issues new shares?

Yes

1.0

Do shareholders elect and dismiss the external auditor?

Yes

1.0

Are changes to the rights of a class of shares only possible if the holders of the affected shares approve?

Yes

1.0

Extent of ownership and control index (0-7)

4.0

Is it forbidden to appoint the same individual as CEO and chairperson of the board of directors?

Yes

1.0

Must the board of directors include independent and nonexecutive board members?

No

0.0

Can shareholders remove members of the board of directors without cause before the end of their term?

No

0.0

Must the board of directors include a separate audit committee exclusively comprising board members?

No

0.0

Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Buyer?

Yes

1.0

Must Buyer pay declared dividends within a maximum period set by law?

Yes

1.0

Is a subsidiary prohibited from acquiring shares issued by its parent company?

Yes

1.0

Extent of corporate transparency index (0-7)

2.0

Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%?

No

0.0

Must Buyer disclose information about board members’ primary employment and directorships in other companies?

No

0.0

Must Buyer disclose the compensation of individual managers?

No

0.0

Must a detailed notice of general meeting be sent 21 days before the meeting?

No

0.0

Can shareholders representing 5% of Buyer’s share capital put items on the general meeting agenda?

No

0.0

Must Buyer's annual financial statements be audited by an external auditor?

Yes

1.0

Must Buyer disclose its audit reports to the public?

Yes

1.0

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Paying Taxes

This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was completed in May 2019 covering for the Paying Taxes indicator calendar year 2018 (January 1, 2018 – December 31, 2018). See the methodology for more information.

image

What the indicators measure

Case study assumptions

Tax payments for a manufacturing company in 2018 (number per year adjusted for electronic and joint filing and payment)

  • Total number of taxes and contributions paid or withheld, including consumption taxes (value added tax, sales tax or goods and service tax)

  • Method and frequency of filing and payment

    Time required to comply with 3 major taxes (hours per year)

  • Collecting information, computing tax payable

  • Preparing separate tax accounting books, if required

  • Completing tax return, filing with agencies

  • Arranging payment or withholding

    Total tax and contribution rate (% of commercial profits)

  • Profit or corporate income tax

  • Social contributions, labor taxes paid by employer

  • Property and property transfer taxes

  • Dividend, capital gains, financial transactions taxes

  • Waste collection, vehicle, road and other taxes

    Postfiling Index

  • Time to comply with VAT refund (hours)

  • Time to obtain VAT refund (weeks)

  • Time to comply with a corporate income tax correction (hours)

  • Time to complete a corporate income tax correction (weeks)

Using a case scenario, Doing Business records taxes and mandatory contributions a medium size company must pay in a year, and measures the administrative burden of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of filing and payments, time taken to comply with tax laws, time taken to comply with the requirements of postfiling processes and time waiting.

To make data comparable across economies, several assumptions are used:

  • TaxpayerCo is a medium-size business that started operations on January 1, 2017. It produces ceramic flowerpots and sells them at retail. All taxes and contributions recorded are paid in the second year of operation (calendar year 2018). Taxes and mandatory contributions are measured at all levels of government.

    The VAT refund process:

  • In June 2018, TaxpayerCo. makes a large capital purchase: the value of the machine is 65 times income per capita of the economy. Sales are equally spread per month (1,050 times income per capita divided by 12) and cost of goods sold are equally expensed per month (875 times income per capita divided by 12). The machinery seller is registered for VAT and excess input VAT incurred in June will be fully recovered after four consecutive months if the VAT rate is the same for inputs, sales and the machine and the tax reporting period is every month. Input VAT will exceed Output VAT in June 2018.

    The corporate income tax audit process:

  • An error in calculation of income tax liability (for example, use of incorrect tax depreciation rates, or incorrectly treating an expense as tax deductible) leads to an incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. discovered the error and voluntarily notified the tax authority. The value of the underpaid income tax liability is 5% of the corporate income tax liability due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period.

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Paying Taxes – Chile

Indicator

Chile

OECD high income

Best Regulatory Performance

Payments (number per year)

7

10.3

3 (2 Economies)

Time (hours per year)

296

158.8

49 (3 Economies)

Total tax and contribution rate (% of profit)

34.0

39.9

26.1 (33 Economies)

Postfiling index (0-100)

57.0

86.7

None in 2018/19

Figure – Paying Taxes in Chile – Score

image

93.3

image

61.8

image

88.9

image

57.0

Payments

Time

Total tax and contribution rate

Postfiling index

Figure – Paying Taxes in Chile and comparator economies – Ranking and Score

DB 2020 Paying Taxes Score

image

0 100

84.3: Regional Average (OECD high income)

75.3: Chile (Rank: 86)

65.8: Peru (Rank: 121)

64.1: Paraguay (Rank: 126)

49.3: Argentina (Rank: 170)

34.4: Brazil (Rank: 184)

Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold.

Figure – Paying Taxes in Chile and comparator economies – Measure of Quality

image

86.7

57.0

47.9

46.6

19.2

7.8

100

90

Index score

80

70

60

50

40

30

20

10

0

Chile Argentina Brazil Paraguay Peru OECD

high income

Details – Paying

Taxes in Chile

image

Tax or mandatory contribution

Payments (number)

Notes on Payments

Time (hours)

Statutory tax rate

Tax base

Total tax and contribution rate (% of profit)

Notes on TTCR

Corporate

1.0

online

48.0

25%

taxable profits

26.23

income tax

Employment

1.0

online

124.5

4.5%

gross salaries

5.13

taxes

Property tax

1.0

online

1.2%

property value

1.78

Municipal tax

1.0

online

0.5%

capital

0.84

Vehicle license

1.0

fixed rate

3 UTM

0.02

tax

Value added tax

1.0

online

123.5

19%

value added

0.00

not included

(VAT)

Municipal tax on

0.0

online and jointly

fixed fee

0.00

small amount

cleanliness

Fuel tax

1.0

included in the

0.00

price of fuel

Employee paid –

0.0

online and jointly

19.1%

gross salaries

0.00

withheld

Social security

contributions

Totals

7

296

34.0

Details – Paying Taxes in Chile – Tax by Type

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Taxes by type

Answer

Profit tax (% of profit)

26.2

Labor tax and contributions (% of profit)

5.1

Other taxes (% of profit)

2.6

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Details – Paying Taxes in Chile – Measure of Quality

Answer

Score

Postfiling index (0-100)

57.0

VAT refunds

Does VAT exist?

Yes

Does a VAT refund process exist per the case study?

Yes

Restrictions on VAT refund process

none

Percentage of cases exposed to a VAT audit (%)

50% – 74%

Is there a mandatory carry forward period?

Yes

Time to comply with VAT refund (hours)

26.0

48.0

Time to obtain VAT refund (weeks)

38.0

33.3

Corporate income tax audits

Does corporate income tax exist?

Yes

Percentage of cases exposed to a corporate income tax audit (%)

0% – 24%

Time to comply with a corporate income tax correction (hours)

30.5

46.8

Time to complete a corporate income tax correction (weeks)

No tax audit per case study scenario

100

Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable.

The hours for Social Security include all the hours for labor taxes and mandatory contributions in general.

The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction.

N/A = Not applicable.

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Trading across Borders

Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

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What the indicators measure

Case study assumptions

Documentary compliance

  • Obtaining, preparing and submitting documents during transport, clearance, inspections and port or border handling in origin economy

  • Obtaining, preparing and submitting documents required by destination economy and any transit economies

  • Covers all documents required by law and in practice, including electronic submissions of information

    Border compliance

  • Customs clearance and inspections

  • Inspections by other agencies (if applied to more than 20% of shipments)

  • Handling and inspections that take place at the economy’s port or border

    Domestic transport

  • Loading or unloading of the shipment at the warehouse or port/border

  • Transport between warehouse and port/border

  • Traffic delays and road police checks while shipment is en route

To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions:

Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are recorded as 22×24=528 hours). If customs clearance takes 7.5 hours, the data are recorded as is. Alternatively, suppose documents are submitted to a customs agency at 8:00a.m., are processed overnight and can be picked up at 8:00a.m. the next day. The time for customs clearance would be recorded as 24 hours because the actual procedure took 24 hours.

Cost: Insurance cost and informal payments for which no receipt is issued are excluded from the costs recorded. Costs are reported in U.S. dollars. Contributors are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. Contributors are private sector experts in international trade logistics and are informed about exchange rates.

Assumptions of the case study:

  • For all 190 economies covered by Doing Business, it is assumed a shipment is in a warehouse in the largest business city of the exporting economy and travels to a warehouse in the largest business city of the importing economy.

  • It is assumed each economy imports 15 metric tons of containerized auto parts (HS 8708) from its natural import partner—the economy from which it imports the largest value (price times quantity) of auto parts. It is assumed each economy exports the product of its comparative advantage (defined by the largest export value) to its natural export partner—the economy that is the largest purchaser of this product. Shipment value is assumed to be $50,000.

  • The mode of transport is the one most widely used for the chosen export or import product and the trading partner, as is the seaport or land border crossing.

  • All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process.

  • A port or border is a place (seaport or land border crossing) where merchandise can enter or leave an economy.

  • Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities.

image

Trading across Borders – Chile

Indicator

Chile

OECD high income

Best Regulatory Performance

Time to export: Border compliance (hours)

60

12.7

1 (19 Economies)

Cost to export: Border compliance (USD)

290

136.8

0 (19 Economies)

Time to export: Documentary compliance (hours)

24

2.3

1 (26 Economies)

Cost to export: Documentary compliance (USD)

50

33.4

0 (20 Economies)

Time to import: Border compliance (hours)

54

8.5

1 (25 Economies)

Cost to import: Border compliance (USD)

290

98.1

0 (28 Economies)

Time to import: Documentary compliance (hours)

36

3.4

1 (30 Economies)

Cost to import: Documentary compliance (USD)

50

23.5

0 (30 Economies)

Figure – Trading across Borders in Chile – Score

Time

Cost

Time

Cost

Time

Cost

Time

Cost

to

to

to

to

to

to

to

to

export:

export:

export:

export:

import:

import:

import:

import:

Border

Border

Documentary

Documentary

Border

Border

Documentary

Documentary

compliance

compliance

compliance

compliance

compliance

compliance

compliance

compliance

Figure – Trading across Borders in Chile and comparator economies – Ranking and Score

image

62.9

image

72.6

image

86.4

image

87.5

image

81.0

image

75.8

image

85.4

image

92.9

DB 2020 Trading Across Borders Score

image

0 100

94.3: Regional Average (OECD high income)

80.6: Chile (Rank: 73)

71.3: Peru (Rank: 102)

69.9: Brazil (Rank: 108)

67.1: Argentina (Rank: 119)

65.1: Paraguay (Rank: 128)

Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import.

Figure – Trading across Borders in Chile – Time and Cost

image

60

290

54

290

36

24

50

50

image

70

Time (hours)

60

50

40

30

20

10

0

Export

image

Export

Time (hours) Cost (USD)

Import

Import

350

300

Cost (USD)

250

200

150

100

50

0

Border Compliance

Documentary Compliance

Border Compliance

Documentary Compliance

image

Details – Trading across Borders in Chile

image

Characteristics

Export

Import

Product

HS 74 : Copper and articles thereof

HS 8708: Parts and accessories of motor vehicles

image

Border

San Antonio port

San Antonio port

Trade partner China United States

image

Domestic transport time (hours)

9

9

Distance (km) 121 121

Domestic transport cost (USD) 345 345

image

image

Details – Trading across Borders in Chile – Components of Border Compliance

Time to Complete (hours)

Associated Costs (USD)

Export: Clearance and inspections required by 2.5

customs authorities

100.0

Export: Clearance and inspections required by 0.0

agencies other than customs

0.0

Export: Port or border handling 60.0

190.0

Import: Clearance and inspections required by 2.5

customs authorities

100.0

Import: Clearance and inspections required by 0.0

agencies other than customs

0.0

Import: Port or border handling 54.0

190.0

Details – Trading across Borders in Chile – Trade Documents

image

Export

Import

Bill of lading Bill of lading

Certificate of origin Certificate of origin

Commercial invoice Commercial invoice

Customs Export Declaration Customs Import Declaration

Packing list Packing list

SOLAS certificate Tax Certificate

Terminal Handling receipt

SOLAS Certificate

image

image

Enforcing Contracts

The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data collection was completed in May 2019. See the methodology for more information.

image

What the indicators measure

Case study assumptions

Time required to enforce a contract through the courts (calendar days)

  • Time to file and serve the case

  • Time for trial and to obtain the judgment

  • Time to enforce the judgment

    Cost required to enforce a contract through the courts (% of claim value)

  • Average attorney fees

  • Court costs

  • Enforcement costs

    Quality of judicial processes index (0-18)

  • Court structure and proceedings (-1-5)

  • Case management (0-6)

  • Court automation (0-4)

  • Alternative dispute resolution (0-3)

The dispute in the case study involves the breach of a sales contract between two domestic businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt enforcement.

To make the data on the time and comparable across economies, several assumptions about the case are used:

  • The dispute concerns a lawful transaction between two businesses (Seller and Buyer), both located in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.

  • The Buyer orders custom-made furniture, then fails to pay alleging that the goods are not of adequate quality.

  • The value of the dispute is 200% of the income per capita or the equivalent in local currency of USD 5,000, whichever is greater.

  • The Seller sues the Buyer before the court with jurisdiction over commercial cases worth 200% of income per capita or $5,000 whichever is greater.

  • The Seller requests the pretrial attachment of the defendant’s movable assets to secure the claim.

  • The claim is disputed on the merits because of Buyer’s allegation that the quality of the goods was not adequate.

  • The judge decides in favor of the seller; there is no appeal.

  • The Seller enforces the judgment through a public sale of the Buyer’s movable assets.

Enforcing Contracts – Chile

image

Standardized Case

Claim value

CLP 19,136,394

image

City Covered

Santiago

Court name Santiago Civil Court

image

Figure – Enforcing Contracts in Chile – Score

image

Indicator

Chile

OECD high income

Best Regulatory Performance

Time (days)

519

589.6

120 (Singapore)

image

Quality of judicial processes index (0-18)

10.0

11.7

None in 2018/19

Cost (% of claim value) 25.6 21.5 0.1 (Bhutan)

image

67.3

image

71.3

image

55.6

Time

Cost

Quality of judicial processes index

Figure – Enforcing Contracts in Chile and comparator economies – Ranking and Score

DB 2020 Enforcing Contracts Score

image

0 100

67.8: Regional Average (OECD high income)

64.7: Chile (Rank: 54)

64.1: Brazil (Rank: 58)

61.6: Paraguay (Rank: 72)

59.1: Peru (Rank: 83)

57.5: Argentina (Rank: 97)

Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators.

Figure – Enforcing Contracts in Chile – Time and Cost

1200

1000

Time (days)

800

600

400

200

0

Time (days) Cost (% of claim value)

image

41.2

995

801

30.0

25.6

22.5

22.0

606

519

589.6 21.5

478

image

image

Argentina Brazil Chile OECD high

income

45

Cost (% of claim value)

40

35

30

25

20

15

10

5

0

Paraguay Peru

Figure – Enforcing Contracts in Chile and comparator economies – Measure of Quality

Chile

Argentina

Brazil

Paraguay

Peru

OECD high income

image

image

1.5

3.5

2

3

2

4

2

4.5

3

3

3

4.1

2.5

3.5

1.5

3

2.5

2.5

0

4.5

2.5

3.2

2.4

3.6

0 2 4 6 8 10 12 14

Sub-Indicator Score

image

image

image

image

Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5)

Details – Enforcing Contracts in Chile

image

Indicator

Time (days) 519

Trial and judgment 270

Filing and service 69

Cost (% of claim value) 25.6

Enforcement of judgment 180

Court fees 5

Attorney fees 15

Quality of judicial processes index (0-18) 10.0

Enforcement fees 5.6

Case management (0-6) 3.5

Court structure and proceedings (-1-5) 3.0

image

Alternative dispute resolution (0-3) 1.5

Court automation (0-4) 2.0

image

Details – Enforcing Contracts in Chile – Measure of Quality

Answer

Score

Quality of judicial processes index (0-18)

10.0

Court structure and proceedings (-1-5)

3.0

1. Is there a court or division of a court dedicated solely to hearing commercial cases?

No

0.0

2. Small claims court

1.0

2.a. Is there a small claims court or a fast-track procedure for small claims?

Yes

2.b. If yes, is self-representation allowed?

No

3. Is pretrial attachment available?

Yes

1.0

4. Are new cases assigned randomly to judges?

Yes, automatic

1.0

5. Does a woman's testimony carry the same evidentiary weight in court as a man's?

Yes

0.0

Case management (0-6)

3.5

1. Time standards

1.0

1.a. Are there laws setting overall time standards for key court events in a civil case?

Yes

1.b. If yes, are the time standards set for at least three court events?

Yes

1.c. Are these time standards respected in more than 50% of cases?

Yes

2. Adjournments

0.5

2.a. Does the law regulate the maximum number of adjournments that can be granted?

Yes

2.b. Are adjournments limited to unforeseen and exceptional circumstances?

No

2.c. If rules on adjournments exist, are they respected in more than 50% of cases?

Yes

3. Can two of the following four reports be generated about the competent court: (i) time to disposition report; (ii) clearance rate report; (iii) age of pending cases report; and (iv) single case progress report?

No

0.0

4. Is a pretrial conference among the case management techniques used before the competent court?

No

0.0

5. Are there any electronic case management tools in place within the competent court for use by judges?

Yes

1.0

6. Are there any electronic case management tools in place within the competent court for use by lawyers?

Yes

1.0

Court automation (0-4)

2.0

1. Can the initial complaint be filed electronically through a dedicated platform within the competent court?

Yes

1.0

2. Is it possible to carry out service of process electronically for claims filed before the competent court?

No

0.0

3. Can court fees be paid electronically within the competent court?

No

0.0

4. Publication of judgments

1.0

4.a Are judgments rendered in commercial cases at all levels made available to the general public through publication in official gazettes, in newspapers or on the internet or court website?

Yes

4.b. Are judgments rendered in commercial cases at the appellate and supreme court level made available to the general public through publication in official gazettes, in newspapers or on the internet or court website?

Yes

Alternative dispute resolution (0-3)

1.5

1. Arbitration

1.5

1.a. Is domestic commercial arbitration governed by a consolidated law or consolidated chapter or section of the applicable code of civil procedure encompassing substantially all its aspects?

Yes

1.b. Are there any commercial disputes—aside from those that deal with public order or public policy— that cannot be submitted to arbitration?

No

1.c. Are valid arbitration clauses or agreements usually enforced by the courts?

Yes

2. Mediation/Conciliation 0.0

image

2.b. Are mediation, conciliation or both governed by a consolidated law or consolidated chapter or

section of the applicable code of civil procedure encompassing substantially all their aspects (for example, definition, aim and scope of application, desig

n.a.

2.a. Is voluntary mediation or conciliation available? No

2.c. Are there financial incentives for parties to attempt mediation or conciliation (i.e., if mediation or conciliation is successful, a refund of court filing fees, income tax credits or the like)?

n.a.

Resolving Insolvency

Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2019. See the methodology for more information.

What the indicators measure

Time required to recover debt (years)

  • Measured in calendar years

  • Appeals and requests for extension are included

Cost required to recover debt (% of debtor’s estate)

  • Measured as percentage of estate value

  • Court fees

  • Fees of insolvency administrators

  • Lawyers’ fees

  • Assessors’ and auctioneers’ fees

  • Other related fees

To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used:

  • A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties.

  • The value of the hotel is 100% of the income per capita or the equivalent in local currency of USD 200,000, whichever is greater.

  • The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s real estate. The hotel cannot pay back the loan, but makes enough money to operate otherwise.

In addition, Doing Business evaluates the quality of legal framework applicable to judicial liquidation and reorganization proceedings and the extent to which best insolvency practices have been implemented in each economy covered.

Outcome

  • Whether business continues operating as a going concern or business assets are sold piecemeal

Recovery rate for creditors

  • Measures the cents on the dollar recovered by secured creditors

  • Outcome for the business (survival or not) determines the maximum value that can be recovered

  • Official costs of the insolvency proceedings are deducted

  • Depreciation of furniture is taken into account

  • Present value of debt recovered

Strength of insolvency framework index (0- 16)

  • Sum of the scores of four component indices:

  • Commencement of proceedings index (0-3)

  • Management of debtor’s assets index (0-6)

  • Reorganization proceedings index (0-3)

  • Creditor participation index (0-4)

Resolving Insolvency – Chile

image

Indicator

Chile

OECD high income

Best Regulatory Performance

Recovery rate (cents on the dollar)

41.9

70.2

92.9 (Norway)

image

Cost (% of estate)

14.5

9.3

1.0 (Norway)

Time (years) 2.0 1.7 0.4 (Ireland)

image

Figure – Resolving Insolvency in Chile – Score

image

Strength of insolvency framework index (0-16)

12.0

11.9

None in 2018/19

Outcome (0 as piecemeal sale and 1 as going concern) 0 .. ..

image

45.1

image

75.0

Recovery rate Strength of insolvency framework index

Figure – Resolving Insolvency in Chile and comparator economies – Ranking and Score

DB 2020 Resolving Insolvency Score

image

0 100

74.9: Regional Average (OECD high income)

60.1: Chile (Rank: 53)

50.4: Brazil (Rank: 77)

46.6: Peru (Rank: 90)

42.1: Paraguay (Rank: 105)

40.0: Argentina (Rank: 111)

Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index.

Figure – Resolving Insolvency in Chile – Time and Cost

4.5

4

Time (years)

3.5

3

2.5

2

1.5

1

0.5

0

Time (years) Cost (% of estate)

image

16.5

4.0

14.5

3.9

12.0

3.1

2.4

9.3

2.0

9.0

1.7

7.0

image

image

Argentina Brazil Chile OECD high

income

18

Cost (% of estate)

16

14

12

10

8

6

4

2

0

Paraguay Peru

Figure – Resolving Insolvency in Chile and comparator economies – Measure of Quality

Chile

Argentina

Brazil

Paraguay

Peru

OECD high income

image

image

4.5

2.5

3

2

4

2.5

1

2

5.5

2.5

3

2

4

2.5

2

1

3.5

2.5

3

0.5

5.3

2.8

2.1

1.9

0 2 4 6 8 10 12 14

Sub-Indicator Score

image

image

image

image

Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3)

Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.”

Figure – Resolving Insolvency in Chile and comparator economies – Recovery Rate

image

70.2

41.9

31.3

19.2

18.2

23.0

Recovery rate(cents on the dollar)

80

70

60

50

40

30

20

10

0

Chile Argentina Brazil Paraguay Peru OECD high income

Details – Resolving Insolvency in Chile

details resolving insolvency in chile

Details – Resolving Insolvency in Chile – Measure of Quality

details resolving insolvency in chile measure of quality

Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.”

Doing Business presents detailed data for the employing workers indicators on the Doing Business website (http://www.doingbusiness.org). The study does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business.

The most recent round of data collection was completed in May 2019. See the methodology for more information.

What the indicators measure

Hiring

(i) whether fixed-term contracts are prohibited for permanent tasks; (ii) maximum cumulative duration of fixed-term contracts;

(iii) length of the maximum probationary period; (iv) minimum wage;(v) ratio of minimum wage to the average value added per worker.

Working hours

(i) maximum number of working days allowed per week; (ii) premiums for work: at night, on a weekly rest day and overtime;

(iii) whether there are restrictions on work at night, work on a weekly rest day and for overtime work; (iv) length of paid annual leave.

Redundancy rules

(i) whether redundancy can be basis for terminating workers; (ii) whether employer needs to notify and/or get approval from third party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether the law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment.

To make the data comparable across economies, several assumptions about the worker and the business are used.

The worker:

  • Is a cashier in a supermarket or grocery store, age 19, with one year of work experience.

  • Is a full-time employee.

  • Is not a member of the labor union, unless membership is mandatory.

The business:

  • Is a limited liability company (or the equivalent in the economy).

  • Operates a supermarket or grocery store in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.

  • Has 60 employees.

  • Is subject to collective bargaining agreements if such agreements cover more than 50% of the food retail sector and they apply even to firms that are not party to them.

  • Abides by every law and regulation but does not grant workers more benefits than those mandated by law, regulation or (if applicable) collective bargaining agreements.

Redundancy cost

(i) notice period for redundancy dismissal; (ii) severance payments, and (iii) penalties due when terminating a redundant worker. Data on the availability of unemployment protection for a worker with one year of employment is also collected.

Employing Workers – Chile

Details – Employing Workers in Chile

Hiring

Fixed-term contracts prohibited for permanent tasks? No

Maximum length of a single fixed-term contract (months) 12.0

Maximum length of fixed-term contracts, including renewals (months) 12.0

Minimum wage applicable to the worker assumed in the case study (US$/month) 450.9

Maximum length of probationary period (months) n.a.

Ratio of minimum wage to value added per worker 0.3

Working hours

Standard workday 9.0

Maximum number of working days per week 6.0

Premium for night work (% of hourly pay) 0.0

Premium for work on weekly rest day (% of hourly pay) 30.0

Premium for overtime work (% of hourly pay) 50.0

Restrictions on night work? No

Restrictions on weekly holiday? No

Restrictions on overtime work? No

Paid annual leave for a worker with 1 year of tenure (working days) 15.0

Paid annual leave for a worker with 5 years of tenure (working days) 15.0

Paid annual leave for a worker with 10 years of tenure (working days) 15.0

Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 15.0

Redundancy rules

Dismissal due to redundancy allowed by law? Yes

Third-party notification if one worker is dismissed? Yes

Third-party approval if one worker is dismissed? No

Third-party notification if nine workers are dismissed? Yes

Third-party approval if nine workers are dismissed? No

Retraining or reassignment obligation before redundancy? No

Priority rules for redundancies? No

Priority rules for reemployment? No

Redundancy cost

Notice period for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 4.3

Notice period for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 4.3

Notice period for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 4.3

Severance pay for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 4.3

Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 4.3

Severance pay for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 21.7

Severance pay for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 43.3

Unemployment protection after one year of employment? Yes

Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 23.1

PEO Chile

Chile stands out as a prime destination for Professional Employer Organization (PEO) services, offering an attractive environment for businesses seeking streamlined HR management and efficient workforce solutions. With its stable economy, business-friendly policies, and robust labor regulations, Chile presents a favorable landscape for both local and international companies looking to optimize their human resource operations. PEO services in Chile encompass a comprehensive array of offerings, from payroll and benefits administration to legal compliance and talent acquisition. The country’s well-educated and skilled workforce, coupled with its strategic geographic location, makes it an enticing choice for companies aiming to establish a strong presence in South America. By leveraging PEO services in Chile, businesses can navigate the intricacies of local labor laws, minimize administrative burdens, and focus on their core competencies, all while tapping into the nation’s potential for sustained growth and prosperity.

PEO services, or Professional Employer Organization services in Chile play a pivotal role in streamlining business operations for both local and international companies. These services encompass a comprehensive range of HR solutions, including payroll management, employee benefits administration, compliance with labor regulations, and personnel administration. By partnering with a PEO in Chile, businesses can offload the complexities of HR management, allowing them to focus on their core activities and strategic growth initiatives. The PEO model also proves particularly valuable for foreign companies entering the Chilean market, as it assists in navigating the country’s unique labor laws and regulations, ensuring legal compliance and smooth workforce integration. Through PEO services, companies in Chile can optimize their human resource processes, enhance operational efficiency, and foster a more conducive environment for sustainable business expansion.

Business Reforms in Chile

From May 2, 2018 to May 1, 2019, 115 economies implemented 294 business regulatory reforms across the 10 areas measured by Doing Business. Reforms inspired by

Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008. =Doing Business reform making it easier to do business. = Change making it more difficult to do business.

DB2020

Starting a Business: Chile made starting a business easier by enabling online registration of closed corporations.

DB2019

Starting a Business: Chile made starting a business easier by replacing the requirement to print and present sealed accounting books and invoices to the Internal Revenue Service with an electronic system.

Enforcing Contracts: Chile made enforcing contracts easier by introducing an e-system that allows plaintiffs to file the initial complaint electronically.

DB2016

Paying Taxes: Chile made paying taxes more costly for companies by increasing the corporate income tax rate.

Resolving Insolvency: Chile made resolving insolvency easier by clarifying and simplifying provisions on liquidation and reorganization, introducing provisions to facilitate the continuation of the debtor’s business during insolvency, establishing a public office responsible for the general administration of insolvency proceedings and creating specialized insolvency courts.

DB2012

Starting a Business: Chile made business start-up easier by starting to provide an immediate temporary operating license to new companies, eliminating the requirement for an inspection of premises by the tax authority before new companies can begin operations and allowing free online publication of the notice of a company’s creation.

Getting Credit: Chile strengthened its secured transactions system by implementing a unified collateral registry and a new legal framework for nonpossessory security interests.

Trading across Borders: Chile made trading across borders faster by implementing an online electronic data interchange system for customs operations.

DB2011

Starting a Business: Chile made business start-up easier by introducing an online system for registration and for filing the request for publication.

Protecting Minority Investors: An amendment to Chile’s securities law strengthened investor protections by requiring greater corporate disclosure and regulating the approval of transactions between interested parties.

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