Chile Introduces New VAT Digital Services B2C Compliance Requirements for Non-Residents

The Chilean tax office, Servicio de Impuestos Internos (SII), has announced new requirements for foreign digital service providers offering services to local consumers in Chile. These updated procedures, which occur on December 1, 2024, include simplified VAT registration and compliance for non-resident providers.

The SII has launched a new platform designed to streamline the VAT registration and reporting process, which will require monthly or quarterly filings depending on the service provider’s transaction volume.

Key Updates:

1. New VAT Registration and Compliance Requirements:
   • Who is affected? Non-resident digital service providers (B2C) offering electronic services to Chilean consumers must comply with these updated VAT registration and reporting rules.
   • Filing Frequency: VAT filings will be due either monthly or quarterly.
   • Simplified Registration Process: Providers can register for VAT via the SII’s new digital platform, simplifying the registration process for foreign providers.
2. Background on VAT for Digital Services in Chile:
   • Chile first introduced a 19% VAT on non-resident digital service providers in July 2020, applying to telecoms, online gaming, digital advertising, cloud services, and more.
   • B2B transactions are excluded from the new B2C VAT requirements and will continue to be subject to the reverse charge mechanism.
3. New Legislation Set for 2027:
   • A proposed Bill will update the VAT requirements from January 2027, including changes in digital platform VAT obligations and new rules for determining the place of supply.
   • Determining where VAT is due may be based on a combination of payment address, IP address, SIM card, and postal address.
4. VAT on Subscriptions for Digital Journals:
   • Since July 2023, VAT has been confirmed for foreign providers offering subscriptions for digital journals in Chile, including educational and consumer news journals.
5. B2C Digital Services Subject to VAT:
   • The VAT applies to a wide range of digital services including:
     • Telecoms and texting
     • Online gaming
     • E-books and digital journals
     • Digital advertising
     • Apps
     • Cloud services (SaaS, IaaS, PaaS)
     • Streaming and downloading video, music, etc.
     • Online storage
6. Determining the Residency of Consumers:
   • Providers and marketplaces must verify the residency of consumers to determine whether Chilean VAT applies. This can be done using evidence such as billing address, SIM country code, payment details, or IP address.
7. No VAT Registration Threshold for Non-Residents:
   • Foreign digital service providers must register for VAT in Chile when they begin offering services to local consumers; there is no registration threshold.
   • VAT returns must be filed monthly or quarterly, with payments due by the 20th of the month following the reporting period.
   • VAT can be paid in Chilean pesos, USD, or Euros.

The introduction of the simplified VAT registration platform and the updated requirements for foreign providers marks a significant change in how digital services are taxed in Chile. Non-resident providers must ensure that they are compliant with the new rules by the December 1, 2024 deadline to avoid penalties. Additionally, foreign providers should stay informed about the proposed changes set for 2027, which could bring further adjustments to the VAT landscape.

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