If you are interested in expanding your commercial operations into Latin America, one good option available is starting a business in Chile — a commerce-friendly trade hub that boasts one of the most diverse economies and developed societies in the region.
If your plans are shorter-term or of a limited-scale, you may wish to consider hiring staff via an employer of record (EOR) in Chile. Because when you hire through an EOR, the provider hires staff on your behalf and you avoid having to go through company formation, allowing you to get staff quickly and enter and exit the market with efficiency. An EOR can also be known as a professional employer organization (PEO).
Below you will find information on the advantages of starting a business in Chile, as well as the different entity types you may wish to consider ahead of company incorporation, while some information is also provided on what makes the Chilean economy so attractive to foreign investors.
Or you could just go ahead and contact us now to discuss your business options.
Advantages of starting a business in Chile
Business formation in Chile comes with a variety of advantages, including:
Low taxes: Chile’s tax rate is lower than the majority of Latin American countries, creating a vibrant and dynamic environment for enterprise.
Trade links: Starting a business in Chile is made all the more attractive by the fact that the country is a global free trade beacon, with an extensive portfolio of free trade agreements (FTAs) providing preferential access to key markets around the globe.
Competitive workforce: While Chile is one of the most highly developed and prosperous countries in the region, with an abundance of highly skilled workers available, it also still offers competitive labor costs, as the BLH Payroll Calculator shows.
Life quality: The high levels of development in Chile means that living and working in the country comes with many of the perks of living in a more traditionally recognised developed country, including good infrastructure, health care and comparatively low levels of crime.
Entity options when starting a business in Chile
While foreign investors starting out with a high level of capital tend to choose a Closely Held Corporation (S.A.C), a number of entity types are available when starting a business in Chile, including a Joint Stock Company (S.p.A), a Limited Liability Company (Ltda.), and a Public Held Corporation (S.A.A).
Below, each of those is considered in greater detail.
Closely Held Corporation (S.A.C): This type of entity is composed of a small number of shareholders and the company stock is not traded on the stock market exchanges, although they often trade on over-the-counter (OTC) exchanges. This entity differs from private owned companies since they carry less potential for a hostile takeover due to the difficulty of obtaining a controlling interest through equity.
Joint Stock Company (S.p.A): This type of entity has stock that can be traded by shareholders, with ownership of those shares proven by certificates of ownership. This type of entity is often created to finance endeavors in which its profit will be shared by the owners.
Limited Liability Company (LLC): This type of entity combines the pass-through taxation of a sole proprietorship with the limited liability of a corporation, and owners are not directly liable for the firm’s liabilities and debts. In most countries, anyone can be a member including foreign individuals or entities, including other LLCs.
Public Held Corporation (S.A.A): This type of entity, which can also be known as a public company, organizes its ownership via shares which can be freely traded on a stock exchange or in over-the-counter markets. Investors have direct claims on the firm’s profits and assets, which are distributed according to the amount of shares owned by the investor. As such, there are more legal requirements associated with this type of corporation, and they are subject to the supervision of the Superintendency of Securities and Insurance (SVS), facts that will be worth considering when starting a business in Chile
The Chilean economy
Chile’s economy has grown considerably over recent years, with gross domestic product (GDP) more than quadrupling between 2002 and 2019, when it was registered at $282.3 billion (all figures in USD). Prosperity has similarly improved since then, with gross national income (GNI) more than tripling during that same period to $15,010 per capita in 2019 — a figure placing Chile as an upper-income nation by international standards.
As well as an extensive array of FTAs, Chile is also a founding member of the Pacific Alliance — a decade-old economic integration initiative that also includes Colombia, Mexico, and Peru, and which has ambitions to expand beyond the region. On top of that, ongoing negotiations for an FTA with Paraguay will finalise Chile’s free trade relationships with the Southern Common Market (Mercosur), another economic association that also includes Argentina, Brazil, and Uruguay.
While Chile is known as a major copper producer and exporter, it also counts wood and wood pulp, seafood, fruits and nuts, and chemicals among its major exports, while significant opportunities can be found in large reserves of gems and precious metals.
The country is also home to a growing services sector, which in 2019 contributed almost 59% of GDP — 5% more than a decade earlier — while its commitment to digitization and streamlining official processes means a great deal of administration can be done online.
All of these conditions combine to make Chile one of the primary destinations for foreign direct investment (FDI) in the region, with FDI inflows exceeding $11 billion in 2019.
Biz Latin Hub can help you with starting a business in Chile
At Biz Latin Hub, our multilingual team of company formation specialists has extensive experience in supporting foreign executives when starting a business in Chile. With our comprehensive portfolio of back office solutions, including legal, accounting, and recruitment support, we can be your single point of contact for entering and doing business in the Chilean market, or any of the other 17 markets in Latin America and the Caribbean where we have a presence.
Contact us now to receive personalized assistance or a free quote.
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