• How to bring foreign capital into Chile

− Title I, Chapter XIV of Chilean Central Bank´s Compendium of

Foreign Exchange Regulations

− Decree Law 600

• Bringing loans into the country

• Foreign exchange restrictions on foreign investment

• Debt-to-equity swap investment.


Foreign investments and loans

How to bring foreign capital into Chile

The transfer of foreign capital into Chile must be made using any of several legal statutes.

The statutes most frequently used are:

•               Title I, Chapter XIV of the Chilean Central Bank's Compendium of Foreign Exchange Regulations.

•               Decree Law 600 (D.L. 600), the Foreign Investment Law.


Title I, Chapter XIV of the Chilean Central Bank's Compendium of Foreign Exchange Regulations

•               These regulations are applied to investors who make foreign exchange operations related to credits, deposits, investments and capital contributions coming from abroad. The procedure is applied to the operations whenever the amount is greater than USD10,000 or their equivalent in other foreign currencies.

•               Foreign currencies must be brought into the country through the Formal Exchange Market (FEM), composed of banks and authorized exchange houses. The foreign investor must inform the Chilean Central Bank of the investment, through a commercial bank or the intervening financial institution, according to the terms and conditions contained in the Chapter XIV regulations.

•               The registration process begins once the funds have entered the country through the FEM. However, foreign currency can also be disbursed directly abroad, in which case the Central Bank must be informed directly by the interested parties, normally within the first 10 days of the following month.

•               The Chilean Central Bank must be informed of payments or remittances of foreign currencies that correspond to capital, interest, profits and other benefits through the FEM entity involved in the operation. There are no restrictions as to the term or the amount of repatriations of these items.

•               All the transactions related to the conversion of the investment to Chilean pesos, and the foreign currency purchases for remitting profits or for repatriating the investment that should be made through the FEM, can be carried out whether the funds are acquired or not in the FEM. However the remittance abroad of the foreign currency must be performed through the FEM.

•               Under recent amendments to the income tax law and to the foreign exchange regulations, investments can also be made through the contribution of shares or rights in foreign resident entities to locally resident entities or to entities set up under the rules of article 41 D of the Chilean Income Tax Law.


Notwithstanding Chapter XIV’s regulations, the Chilean Central Bank, under article 47 of

its Organic Law, can enter into a foreign exchange agreement with external or internal

investors or creditors and other parties in a foreign exchange operation, establishing the

terms and conditions in which the capital, interests, profits or benefits that are generated

can be used, sent abroad or restored to the investor or to the internal creditor, and also, to

assure them free access to the FEM.


Decree Law 600

This system has existed since 1974 and regulates the relationship between the State of

Chile and the foreign investor. Basically, the relationship is an investment contract

between the State of Chile and the investor that contains the specific rules applicable to

the specific investment. D.L. 600 contains general guidelines that govern these contracts,

but specific clauses can be negotiated with the Foreign Investment Committee. Some of

the clauses contained in a typical foreign investment contract are the following:

•               The investment can be made in foreign currency, in tangible assets (both new and used), in technology and in loans.

•               The accepted minimum investment is US$5,000,000 or its equivalent in other currencies and US$2,500,000 in the case of physical goods or technology. The loans or credit facilities associated to the investment cannot represent more than 75% of the total amount invested in Chile.

•               The contract guarantees free access to the foreign exchange market for the remittance of capital (or principal) and profits (or interest).

•               The investor can repatriate the capital after one year has lapsed from the date it was brought into the country. Profits can be remitted abroad at any time, once all the taxes due are paid off or the proper tax withholding has been made.

•               The contract guarantees that the Value-Added Tax and customs systems shall be frozen until the investment in physical assets has been completed.

•               The contract guarantees non-discrimination with respect to local investors. Although access to local borrowings may be limited, no such restrictions are currently imposed.

•               The contract guarantees a fixed 42% income tax burden for a period of ten years; however, the foreign investor may elect at any time to waive the fixed tax rate and be subject to the general system of income taxes. The contract can also guarantee that the special mining activities tax will not be increased over a 10 year period.


There are additional benefits for investments of US$50,000,000 and over. The most important of which are the following:

•               The 42% invariability of the income tax can be extended to 20 years.

•               Tax regulations and instructions regarding depreciation, carry forward of losses, and organization and start up expenses can be frozen for the same period.

•               If the investment will produce exportable products, the Central Bank rules regarding freedom to export can be frozen, and special rules regarding the repatriation of export proceeds can be agreed upon.


In general, the Foreign Investment Committee approves only productive investments.

Chile has signed a number of investment protection treaties.


Bringing loans into the country.

Foreign loans do not require prior authorization from the Chilean Central Bank for their entrance into the country. In order to receive foreign currencies entered into the country, certain information regarding the operations must be submitted to the FEM entity involved, information that the Formal Exchange entity must send to the Chilean Central Bank before the funds are handed over to the debtor.

The debtor can receive the foreign currency or its equivalent in Chilean pesos.

The payment of the capital, of the interest and other obligations related to the loan must be remitted through the FEM and the Chilean Central Bank must be informed through a commercial bank.


Foreign exchange restrictions on foreign investment

As of April 19, 2001, the restrictions formerly applicable to deposits, investments and capital contributions operations have been repealed. Only information requirements and execution of certain operations through the FEM (Banks and Exchange Houses) remain.


Debt-to-equity swap investments

The Chilean Central Bank has repealed the foreign investment system usually referred to as debt-to-equity swaps. Existing investors who used this system are free to remit their investment and profits abroad, with no time constraints.