L egal -Economic Aspects of Investing in Chile

1. Legal-Economic Aspects of Investing in Chile Gustavo Cuevas InvestChile March 2012

2. Why Chile ? • 1. Dynamic politics • 2. Economic model • 3. Trade relations • II.Set up Business in Chile • 1. Protection of foreign investments • 2. Different types of companies • 3. Residency for foreigners in Chile Index

3. FirstPart: Why Chile?

4. 1. Dynamic Politics

5. A. Political Stability • Chile stands out in the region • Peaceful cohabitation of all political sectors • Continuity of public policies

6. B. Legal Safety • Well-defined political and legal structure • Clearly separated powers • Legalistic culture • Special protection for foreign investors

7. C. State Support • There is political will. The necessary Instruments to implement innovative and technological transfer businesses • Existences of instruments that favour setting up industries in different regions of Chile

8. D. Flexibility of Labour Law • Freedom to hire and dismiss employees • Low employer contributions • Solutions to impartial conflicts • Clear, uniform and stable regulations

9. 2. Economic Model

10. A. Open Economy • Widespread national consensus on the importance of free trade • Low import duties • Free movement of capital, goods and people • No discrimination against foreigners

11. B. Taxes • Low corporation taxes • Trade agreements to prevent double taxation • No tax discrimination between locals and foreigners • Clear, uniform and stable regulations • Modern technologies applied in tax inspection.

12. C. Banking System • An autonomous Central Bank with a clear, constitutional mandate • Strict banking regulations • Autonomous and professional regulatory organisation • Professional and capitalised banks • Important technological leadership • Nationwide coverage

13. 3. Trade Relations

14. A. Communication Infrastructure • Extensive coverage of low-cost, data communication • Appropriate road infrastructure • Appropriate and low-cost port and air infrastructure • Infrastructure planning based on Chile’s growth needs • Proximity between production centres and shipping areas

15. B. Free Trade Agreements • Chile has signed the most free trade agreements in the world, covering 89% of the world GDP. • The contents of these agreements is extensive and they cover key economic sectors • There is a free trade agreement between the EU y Chile.

16. C. Tax conventions tending to avoid double taxation • Agreement to avoid double taxation between Chile and Belgium (since 2011) • Tax Variable without negative effect • Clear and specific regulations to ensure tax neutrality

17. D. Common Cultural Values with Europe • Intolerance of corruption • Respect agreements • Work culture • Efficient State • Integrated society

18. E. Chile : Investment Platform • Time zone for the Americas • Knowledge • Language • Agreement with MERCOSUR and free trade agreements • Personal safety

19. Second Part : Setting up Business in Chile

20. 1. Protection of Foreign Investments

21. A. Constitutional Level • Property rights • Economic freedom • State’s subsidiarity principal

22. B. Legal Level • Foreign Exchange Regulations at Banco Central de Chile (Chapter XIV) • Decree Law No. 600 (DL.600)

23. C. Contents of Foreign Investment Contract No discrimination No discretion in procedures Free access to production sectors Contract with the Chilean State Access to the formal exchange market Repatriation of capital and profits Choice of taxation system Various investment methods

24. 2. Different Types of Businesses

25. Joint stock company • Public Limited company • Limited liability company • Incorporation period • Incorporation expenses • Foreign participation in companies

26. 3. Residency for Foreigners in Chile

27. A. Visa • For investors • Subject to a work contract

28. B. Taxes • Taxes are mandatory in Chile • Agreement to avoid double taxation • Agreement to recover retirement funds • Specific work contract regulations

29. End Gustavo Cuevas InvestChile March 2012