In general, foreign income and dividends received by a domestic corporation are subject to Chilean taxation in the financial year when accrued or received. A tax credit for taxes paid abroad is granted, subject to the regulations of the Income Tax Law. Branches of foreign corporations are taxed on their income without regard to the results of the head office. Also, stock dividends are not taxed. Deductions Depreciation rates are calculated on the estimated useful life of the asset.
Annual depreciation is taken by the straight-line method.
An indefinite carryforward of losses is allowed. No carrybacks are allowed Taxes Taxes imposed by Chilean laws are deductible, provided they are related to the normal activities of the company. However, income taxes, real estate taxes or special contributions for promotion or improvement are not deductible. Tax Incentives Payment of customs duty may be deferred for seven years in the case of certain capital goods and written off every year in the same proportion as the increase of exports of goods produced with the imported assets. Chile has signed free-trade agreements with Mexico and Canada and has joined Mercosur with associate member status.