Employing in Chile

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Expanding into
Chile

The Republic of Chile occupies one of the world’s most recognisable landmasses, a narrow strip stretching north to south 4,270 km (2,653 mi) down the west coast of South America alongside the Pacific Ocean. Chile is only 445 km (276 mi) across at its widest point, with an average width of 177 km (110 mi), and is separated from Argentina and Bolivia to the east by the Andes mountain range.

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Global Expansion is a step to make for any business, regardless of your goal. But the opportunities that can come with an expansion can be stimulating as well as intimidating and confusing, especially when you consider all of the registration procedures that need to be done and the documentation required.

Going at it without the proper support can increase the costs, time and risks involved.

The legwork and potential red tape can be worked through more efficiently and cost-effectively with the support of a Professional Employer Organisation (PEO) such as Bradford Jacobs, primarily through our Employer of Record (EOR) framework.

It can be best utilised when businesses are just beginning their expansion process and require more information before incorporating an entity and fully establishing themselves in that market.

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Country EOR Guide - Bradford Jacobs

Download our Guide to Chile

Learn all about expanding into Chile and see what we can do to make your expansion easier.

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Download our Guide to Chile

Learn all about expanding into Chile and see what we can do to make your expansion easier.

Country EOR Guide - Bradford Jacobs
DOWNLOAD GUIDE

Hiring Staff
in Chile

On the economic front, Chile’s open market is based on high levels of foreign trade, underpinned by stable financial institutions and a strong commodities sector, with copper its leading export and providing a fifth of government revenue.

Chile has a liberal outlook on international trade and lifted its global profile with various economic and political memberships and alliances. In 2010 Chile became the first South American nation to join the Organisation for Economic Cooperation and Development, followed by membership in the Progressive Trans-Pacific Partnership. Trade partners include the European Union, China, India, South Korea and the Mercosur bloc of Argentina, Brazil, Paraguay and Uruguay.

In 2021, Chile ranked 43rd globally with a nominal Gross Domestic Product of USD 331.25 billion but only 54th for per capita GDP at USD 16,799. Chile’s Central Bank reduced its growth forecast for 2022, predicting reductions in private consumption and investment alongside increased inflation.

Chile is one of the most industrialised nations in South and Latin America, with copper, coal and nitrate mining among the key operations. Chile is the world’s largest producer of copper, responsible for close to 30% of global output. Manufacturing is a growth sector for the economy and features food, chemicals and wood processing. The agriculture sector includes fruit growing, fisheries and viticulture. Chile is a leading wine-producing nation, and the industry is predicted to continue its healthy growth.

Chile is building a reputation as a ‘digital hub’ to rival Brazil’s No.1 position in the region. At the same time, the strength of the country’s stock market and commodities sector continues to prove a significant attraction for Foreign Direct Investment. The World Bank assesses Chile as being one of the fastest-growing markets in South and Latin America.

Country:
Chile (the Republic of Chile)
Local Currency:
Chilean Peso (CLP)
Time Zone:
Continental Chile: UTC-3 in the summertime and UTC-4 in the wintertime
Easter Island: UTC-5 in the summertime and UTC-6 in the wintertime
Magallanes & Chilean Antarctica: UTC-3 the whole year
Country Dial Code:
+56
Tax Year:
January 1 – December 31
VAT:
19%
Minimum Wage:
CLP 400,000/month (EUR 458 – USD 498) for 18 to 65 years old.
CLP 298,391/month (EUR 342 – USD 371) for -18s and +65s.
Taxpayer Identification Number (TIN):
The Rol Único Tributario (RUT) is the Tax Identification Number (eight numbers and one letter).
For Chileans and foreigners resident in Chile, the National Identity Number (RUN) given by the Civil Registry also serves as Tax Identification Number (RUT).
Main trading partners:
Main customers in 2021: China (38.8%), USA (5.8%), Japan (7.7%), South Korea (5.1%), and Brazil (4.8%).
Main suppliers in 2021: China (29.9%), USA (17.4%), Brazil (8.4%), Argentina (5.3%), and Germany (3.2%).

Hiring Staff
in Chile

On the economic front, Chile’s open market is based on high levels of foreign trade, underpinned by stable financial institutions and a strong commodities sector, with copper its leading export and providing a fifth of government revenue.

Chile has a liberal outlook on international trade and lifted its global profile with various economic and political memberships and alliances. In 2010 Chile became the first South American nation to join the Organisation for Economic Cooperation and Development, followed by membership in the Progressive Trans-Pacific Partnership. Trade partners include the European Union, China, India, South Korea and the Mercosur bloc of Argentina, Brazil, Paraguay and Uruguay.

In 2021, Chile ranked 43rd globally with a nominal Gross Domestic Product of USD 331.25 billion but only 54th for per capita GDP at USD 16,799. Chile’s Central Bank reduced its growth forecast for 2022, predicting reductions in private consumption and investment alongside increased inflation.

Chile is one of the most industrialised nations in South and Latin America, with copper, coal and nitrate mining among the key operations. Chile is the world’s largest producer of copper, responsible for close to 30% of global output. Manufacturing is a growth sector for the economy and features food, chemicals and wood processing. The agriculture sector includes fruit growing, fisheries and viticulture. Chile is a leading wine-producing nation, and the industry is predicted to continue its healthy growth.

Chile is building a reputation as a ‘digital hub’ to rival Brazil’s No.1 position in the region. At the same time, the strength of the country’s stock market and commodities sector continues to prove a significant attraction for Foreign Direct Investment. The World Bank assesses Chile as being one of the fastest-growing markets in South and Latin America.

Country:
Chile (the Republic of Chile)
Local Currency:
Chilean Peso (CLP)
Time Zone:
Continental Chile: UTC-3 in the summertime and UTC-4 in the wintertime
Easter Island: UTC-5 in the summertime and UTC-6 in the wintertime
Magallanes & Chilean Antarctica: UTC-3 the whole year
Country Dial Code:
+56
Tax Year:
January 1 – December 31
VAT:
19%
Minimum Wage:
CLP 400,000/month (EUR 458 – USD 498) for 18 to 65 years old.
CLP 298,391/month (EUR 342 – USD 371) for -18s and +65s.
Taxpayer Identification Number (TIN):
The Rol Único Tributario (RUT) is the Tax Identification Number (eight numbers and one letter).
For Chileans and foreigners resident in Chile, the National Identity Number (RUN) given by the Civil Registry also serves as Tax Identification Number (RUT).
Main trading partners:
Main customers in 2021: China (38.8%), USA (5.8%), Japan (7.7%), South Korea (5.1%), and Brazil (4.8%).
Main suppliers in 2021: China (29.9%), USA (17.4%), Brazil (8.4%), Argentina (5.3%), and Germany (3.2%).

The Main Sectors of the Chilean Economy

The country focuses on the following key sectors, which all have a significant impact on the country’s economy:

Mineral Resources and Mining

Copper is the mainstay of Chile’s mining industry, providing 20% of government revenue and 28% of global production; 5.73 million tons were mined in 2020. Foreign companies from the US, Canada, Australia, Europe and Asia own 72% of Chile’s copper mines. The success of Chile’s copper operations has massive significance for the overall economy. Chile is the world’s second-largest producer of lithium carbonate equivalent and mined over 70,000 tons of lithium in 2019, 23% of global production representing 11% of Chile’s GDP. Chile holds over 50% of the world’s lithium reserves and is the world’s leading producer of iodine, rhenium, sodium and potassium nitrate.

Chile is among the leading industrialised economies in Latin America, and the sector contributed 31.75% of GDP in 2021, a 21.92% increase over 2020, and employed approximately 32% of the workforce. Aside from mining, the manufacturing sector also features food and beverages processing, tobacco, chemicals and timber production. The Santiago-Valparaiso region is the core industrial area with another main industrial complex based in Concepciόn.

The services sector provides around 54% of GDP and employs over 63% of the labour force. Tourism, retail trade and telecommunications are among the fastest-growing elements. Post-pandemic, the sector rebounded in 2021, particularly in hospitality, education and health services, transport and general commercial services.

Banking and Finance

The Central Bank of Chile is autonomous regarding monetary policy and reserves the right to intervene in the market. The banking regulator is the Comisiόn de Mercado Financiero (CMF). The commercial banking sector has one public sector bank, which operates under the same regulations as the 18 private sector banks, the sixth largest of which account for over 86% of all loans in the market. Commercial banking faces growing competition from non-financial institutions, such as department stores’ credit cards and credit unions, and private non-profit organisations that manage social welfare benefits and payroll loans for members. Within the financial sector, the government accumulates sovereign wealth fund surpluses during periods when high prices for its mined copper promote growth, then uses the funds to stimulate other sectors of the economy.

Contributing under 4% to the GDP but employing around 13% of the workforce, Chile has a small but varied agriculture sector, in which viticulture is the leading light. Fruit farming mainly features apples, pears and peaches, with other producers concentrating on onions, corn, oats, garlic, asparagus, beans and poultry. Sheep farming and wool production are features of Chile’s south, with cattle raised in the central region. Chile is well within the world’s top 10 for both wine production and exports, with production based in the wine-growing areas defined by the Ministry of Agriculture – Atacama, Coquimbo, Aconcagua, the Central Valley, Alto Maipo, Central Maipo, Pacific Maipo, Cachapoal Valley, Colchagua Valley and Southern Chile.

The Main Sectors of the Chilean Economy

The country focuses on the following key sectors, which all have a significant impact on the country’s economy:

Mineral Resources and Mining

Copper is the mainstay of Chile’s mining industry, providing 20% of government revenue and 28% of global production; 5.73 million tons were mined in 2020. Foreign companies from the US, Canada, Australia, Europe and Asia own 72% of Chile’s copper mines. The success of Chile’s copper operations has massive significance for the overall economy. Chile is the world’s second-largest producer of lithium carbonate equivalent and mined over 70,000 tons of lithium in 2019, 23% of global production representing 11% of Chile’s GDP. Chile holds over 50% of the world’s lithium reserves and is the world’s leading producer of iodine, rhenium, sodium and potassium nitrate.

Chile is among the leading industrialised economies in Latin America, and the sector contributed 31.75% of GDP in 2021, a 21.92% increase over 2020, and employed approximately 32% of the workforce. Aside from mining, the manufacturing sector also features food and beverages processing, tobacco, chemicals and timber production. The Santiago-Valparaiso region is the core industrial area with another main industrial complex based in Concepciόn.

The services sector provides around 54% of GDP and employs over 63% of the labour force. Tourism, retail trade and telecommunications are among the fastest-growing elements. Post-pandemic, the sector rebounded in 2021, particularly in hospitality, education and health services, transport and general commercial services.

Banking and Finance

The Central Bank of Chile is autonomous regarding monetary policy and reserves the right to intervene in the market. The banking regulator is the Comisiόn de Mercado Financiero (CMF). The commercial banking sector has one public sector bank, which operates under the same regulations as the 18 private sector banks, the sixth largest of which account for over 86% of all loans in the market. Commercial banking faces growing competition from non-financial institutions, such as department stores’ credit cards and credit unions, and private non-profit organisations that manage social welfare benefits and payroll loans for members. Within the financial sector, the government accumulates sovereign wealth fund surpluses during periods when high prices for its mined copper promote growth, then uses the funds to stimulate other sectors of the economy.

Contributing under 4% to the GDP but employing around 13% of the workforce, Chile has a small but varied agriculture sector, in which viticulture is the leading light. Fruit farming mainly features apples, pears and peaches, with other producers concentrating on onions, corn, oats, garlic, asparagus, beans and poultry. Sheep farming and wool production are features of Chile’s south, with cattle raised in the central region. Chile is well within the world’s top 10 for both wine production and exports, with production based in the wine-growing areas defined by the Ministry of Agriculture – Atacama, Coquimbo, Aconcagua, the Central Valley, Alto Maipo, Central Maipo, Pacific Maipo, Cachapoal Valley, Colchagua Valley and Southern Chile.

Commercial Laws in
Chile

Labour Authorities

The Ministry of Labour and Social Welfare: Labour laws and regulations in Chile are governed by this Ministry and generally come under the Chilean Labour and Employment Code, which additional decrees and laws can supplement.

The Central Organisation of Workers of Chile: is a federation of unions and affiliates with the International Trade Union Confederation. Under the Labour Code, workers have the right to join and form unions:

  • Confederation of Copper Workers
  • National Association of Fiscal Employees
  • General Confederation of Public and Private Sector Workers
  • International Transport Workers’ Confederation

The Tax Administration (Servicio de Impuestos Internos, SII): The SII oversees tax rulings, enforcement, inspections and enforcing tax laws and has the right to examine all individual and corporate filings to ensure compliance. Alongside the SII, municipalities and other agencies are also involved in taxation issues.

The Treasury (Fisco): The Treasury represents the state.

 The General Treasury of the Chilean Republic (Tesoreía General de la Republica): The General Treasury collects all taxes on behalf of the Treasury (Fisco) and is a separate administration from the SII. The General Treasury’s responsibilities include collecting the following:

  • Business Income (First Category Tax – FCT)
  • Salaries and remuneration (Second Category Tax – SCT)
  • Other personal income (Complementary Global Tax – CGT)
  • Non-residents’ income (Additional Tax – AT)

The General Treasury is also responsible for collecting social security contributions from employees and employers. Employees’ contributions are deducted and remitted by their employers to the Ministry of Labour and Social Welfare (Ministerio del Trabajo y Previsiόn Social) for the Social Security Administration (SSA).

Under the Labour Code, there does not have to be a written contract for the employment relationship to be valid, although written employment contracts are the norm. In any case, the details of the employment relationship must be given to the employee in writing within 15 days of starting work or five days if the employment agreement is for no more than 30 days.

If the employer fails to comply, courts will decide that the employee’s version of the agreement is valid, and the Labour Inspectorate will likely fine the employer.

The Code requires the contract must detail the following: the employee’s date of birth and nationality; the contract’s start date and where it was signed; the type of contract, whether indefinite or fixed-term, for example; location and description of the job; remuneration and payment schedule. Offer letters are permitted, but these must still comply with all statutory provisions as required by the Code.

Contracts may be drafted in any language, but the Labour Directorate insists that every contract should have a Spanish version in case of legal issues.

Commercial Laws in
Chile

Labour Authorities

The Ministry of Labour and Social Welfare: Labour laws and regulations in Chile are governed by this Ministry and generally come under the Chilean Labour and Employment Code, which additional decrees and laws can supplement.

The Central Organisation of Workers of Chile: is a federation of unions and affiliates with the International Trade Union Confederation. Under the Labour Code, workers have the right to join and form unions:

  • Confederation of Copper Workers
  • National Association of Fiscal Employees
  • General Confederation of Public and Private Sector Workers
  • International Transport Workers’ Confederation

The Tax Administration (Servicio de Impuestos Internos, SII): The SII oversees tax rulings, enforcement, inspections and enforcing tax laws and has the right to examine all individual and corporate filings to ensure compliance. Alongside the SII, municipalities and other agencies are also involved in taxation issues.

The Treasury (Fisco): The Treasury represents the state.

 The General Treasury of the Chilean Republic (Tesoreía General de la Republica): The General Treasury collects all taxes on behalf of the Treasury (Fisco) and is a separate administration from the SII. The General Treasury’s responsibilities include collecting the following:

  • Business Income (First Category Tax – FCT)
  • Salaries and remuneration (Second Category Tax – SCT)
  • Other personal income (Complementary Global Tax – CGT)
  • Non-residents’ income (Additional Tax – AT)

The General Treasury is also responsible for collecting social security contributions from employees and employers. Employees’ contributions are deducted and remitted by their employers to the Ministry of Labour and Social Welfare (Ministerio del Trabajo y Previsiόn Social) for the Social Security Administration (SSA).

Under the Labour Code, there does not have to be a written contract for the employment relationship to be valid, although written employment contracts are the norm. In any case, the details of the employment relationship must be given to the employee in writing within 15 days of starting work or five days if the employment agreement is for no more than 30 days.

If the employer fails to comply, courts will decide that the employee’s version of the agreement is valid, and the Labour Inspectorate will likely fine the employer.

The Code requires the contract must detail the following: the employee’s date of birth and nationality; the contract’s start date and where it was signed; the type of contract, whether indefinite or fixed-term, for example; location and description of the job; remuneration and payment schedule. Offer letters are permitted, but these must still comply with all statutory provisions as required by the Code.

Contracts may be drafted in any language, but the Labour Directorate insists that every contract should have a Spanish version in case of legal issues.

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