The LOC alternative available to foreign investors has traditionally been based only on an administrative resolution issued by the Central Bank and, consequently, is to some extent more vulnerable in our opinion. Decree Law 600 provides that foreign investors and the local companies receiving investments are subject to the general provisions of law applicable to domestic investors and that no discrimination, neither direct nor indirect, may be made against them. Nevertheless, it provides that regulations may be enacted to limit the foreign investors' access to local financing. Also, Decree Law 600 grants to foreign investors the possibility of benefiting from an invariable income tax regime and, in certain cases, from special devices particularly designed for project financing purposes. But since the current income rates, in the aggregate, impose a lower tax burden, none of these special tax regimes are presently attractive to existing foreign investors.
Any excess is subject to the generally applicable local income taxes.
In addition, these investors may also be authorized to operate offshore accounts with the proceeds resulting from the exportation of goods or services to cover expenses incurred abroad and, therefore, may be exempted from the general obligation of returning such funds into Chile and converting them into local currency in the formal foreign exchange market. It is important to stress the fact that foreign loans are currently subject to a stamp tax. This deposit must be made in the same currency in which the foreign loan has been disbursed, does not gain interest and must remain with the Central Bank for a period of one year regardless of the maturity of the loan concerned. Please note that an alternative device designed to mitigate the financial burden of this deposit requirement is also available. Chapter XIX investors are granted access to the formal foreign exchange market for the repatriation of capital and profits.