Doing business

(Last updated: 05 Nov 2008)
 

Business opportunities

Austrade’s business development specialists have prepared a range of market profiles that offer potential to assist in your exporting investigations. Austrade’s in-market teams have identified opportunities for Australian exporters in various industries (see 'Profiled industries in this market' on the left side of this page).

In conjunction with the market profiles, the Opportunities Online portal may be a useful addition to your information sources. The database established by Austrade aims to deliver international sales leads ('export opportunities'), including tenders, identified by our overseas network to Australian businesses.

Registering is simple and once this is done you will have the option of accessing a weekly newsletter featuring the most recent opportunities uploaded onto the system in industry sectors of interest to you. Another feature is the ability to view, and also print, the complete page of opportunity details.

For general inquiries concerning Austrade’s services, please contact Austrade Direct on 13 28 78.

Business etiquette

Business tips

Business appointments should be arranged well in advance.

A clear statement of the purpose of the meeting can sometimes help when visiting Chile for the first time.

An interpreter is recommended when meeting with Spanish-speaking business people for the first time.

Chileans are generally punctual and expect the same from visitors.

Lunch is generally for an hour at 1.00pm unless business is being conducted, in which case two to three hour lunches are common.

Personal contacts do play a special role in Chile and can make the difference between finding an open or closed door.

When conducting business, consideration must be taken with dressing well, as it is a priority in Chile and is perceived as a sign of respect. Dress conservatively and formally. Be aware that the 'business casual' look (ie. sports coat, khakis, casual shoes) will not be well-received. Men should wear suits (blue or grey), white shirts, and conservative ties. 

Similarly, women should stick with blue or grey business suits and shoes with low heels.

Tuxedos and black tie are used only for diplomatic and very formal events, while dark suits are used for evening, or diplomatic engagements. 

Please also note:

Bribery of foreign public officials is a crime. Australian individuals and companies can be prosecuted in Australia for bribing foreign officials when overseas. For more information, go to the Attorney General's Department on foreign bribery.

Tariffs and non-tariff barriers

Tariff

Chile’s tariff rate is based on the Harmonised System, and for most products is presently a uniform eight per cent applicable on the cost, insurance and freight (CIF) value of most products.

Import duties are scheduled to reduce by one per cent each year until 2003 where most products will have a six per cent uniform import duty.

Preferences on negotiated items are granted to other members of the Latin American Integration Association (LAIA).

Chile has recently become a member of the Mercosur agreement, and products manufactured by Mercosur members are subject to lower duty rates.

Exemptions from customs duty are granted to imports for some specific activities, principally in relation to the copper, nitrate and fishing industries.

Supplementary import duties are occasionally levied on specified products.

Chile maintains import and export licensing requirements. However, these are more for statistical purposes rather than control. Import licenses are approved by the Central Bank, and it usually takes only a matter of days.

Customs authority contact details:

Servicio Nacional de Aduanas
Division de Operaciones
Plaza Sotomayor SN, 60
Valparaiso, Chile
Tel: +56 32 251 122
Fax: +56 32 250 383

Non-tariff barriers

Import restrictions

Most imports may enter Chile free from controls although a document known as the Informe de Importacion is required for all imports. This document is Issued by the Central Bank, and may also be obtained and processed through a local commercial bank.

Payment for visible trade transactions is not permitted unless document has been issued.

Shipments on deferred payment terms, of over 360 days, require the prior authorisation of the credit terms by the Central Bank.

Application for deferred payments must be accompanied by the manufacturer's original
pro-forma invoice.

If the exporter is not the manufacturer the exporters' original pro-forma invoice must be provided quoting the price stated on the manufacturer's pro-forma invoice and must indicate any additional charges that may be incurred, i.e. freight, insurance etc. Commission should not be included (see 'Pro-forma invoice' below). Used passenger cars and some used parts are generally prohibited.

The import document number issued by the bank must appear on all commercial invoices and bills of lading covering the shipment.

Product certification, labelling and packaging

Hay and straw may be used only for packing bottles, glassware, crystal, china, porcelain and earthenware. If used, it must have been disinfected and be covered by a phytosanitary certificate visaed by the Consulate.

Goods packed in sacks or bags must not exceed 80kg in weight.

All outer containers must be marked to conform with the commercial invoice and bill of lading. Any variance exceeding 0.5 per cent is subject to a fine. Outer containers must be stencilled in Spanish and in black letters not less than 50mm in height. Marking must show destination, gross weight in kilograms, marks and numbers.

Packaged goods must be marked to show the quality, purity or mixture, and the net weight or measurement of the contents.

All items ordinarily used or consumed by the public must show the country of origin.

Foods and beverages must have labels bearing the following details in Spanish:

• Specific name of product
• The ingredients (including all additives)
• Net weight or volume of contents in metric units
• Date of manufacture or packing
• The expiry date, designation imported product
• Product registration numbers (where applicable)
• Name and address of the importer, agent or representative

Statements appearing on labels in a language other than Spanish must have a direct Spanish translation in letters of the same type and colour.

Every packet containing drugs or pharmaceuticals must have the product's registration number plainly printed on it before it may be sold.

Piece goods must carry labels giving the percentages of their component fibres (eg. cotton, silk, nylon, etc.), and the same description must appear on the invoice.

Chile’s technical standards and quality controls are established by the Instituto Nacional de Normalizacion (National Bureau of Standards). Its requirements are in accordance with the internationally accepted norms, referred to as Basic Requirements. The Instituto Nacional de Normalizacion is Chile's representative in the International Standards Organisation.

Special certificates

Livestock require sanitary certificates issued by an approved authority in the country of origin; in Australia this is usually the Australian Quarantine and Inspection Service, Commonwealth Department Agriculture, Fisheries and Forestry Australia or the relevant state department of agriculture.

Plants and their parts, whether in their natural state or processed, require phytosanitary certificates issued by an approved authority in the country of origin.

Foodstuffs require a certificate of analysis issued by an official laboratory in the country of origin to obtain prior authorisation from the Chilean National Health Service.

A certificate of age may be required for imports of spirituous beverages.

Methods of quoting and payment

Quotations should be in Australian dollars or US dollars on a CIF basis (Incoterms 1990) with details of component costs, ie. FOB price (Incoterms 1990), freight, insurance, etc.

Terms of payment are usually letter of credit but other terms such as cash against documents may be negotiated.
 
Shipments on deferred payment terms, of over 360 days, require the prior authorisation of the credit terms by the Central Bank (see 'Import restrictions').

Documentary requirements

Commercial invoice

Five copies required, preferably in Spanish is required. Some importers may request additional copies.
 

The invoice must include:

• Detailed description of the goods
• Invoice number and date of shipment
• Name and address of exporter
• Name and address of importer
• Terms of sale
• Final destination in Chile
• Whether dispatch is effected by sea or air
• Number of packages
• Marks
• Gross, legal and net weights
• The unit price of each item
• Statement of charges comprising FOB or FAS value (Incoterms 1990) - should be shown in the extreme right-hand margin of the invoice
• Freight
• Insurance
• Any other cost item up to total CIF price (Incoterms 1990)
• The number and date of the Informe de Importacion from the Central Bank of Chile

The invoice must contain the following signed declaration in English or Spanish: 'We hereby certify that the details contained in this invoice are true and correct and that the goods are of .................origin'. Signed .............. (Director, Secretary, Partner or Proprietor)', whichever is applicable.

Fax signatures are not permitted on the original document.

Bill of lading

To Order bills are acceptable, but the name of the consignee must be included. The original and two copies signed by the shipper or his representative must be provided and must indicate:

• The name of the consignee
• The Registration Certificate number and date of issue
• The gross weight of items shipped, and the total gross weight
• All freight charges

Details of the goods and freight should appear on the face of the document and must not exceed 30 lines. If the description exceeds this space, a further B/L should be use. 

Certificate of insurance

Number of required copies will be stipulated insurance. 

Insurance

Normal commercial practice.

Public health requirements

All pedigree livestock, birds or unregistered purebred animals imported for breeding are subject to quarantine. All other livestock and birds are subject to a rigid sanitary inspection and to quarantine if necessary.

Imported food products are subject to detailed regulations regarding standards of quality and imports require prior authorisation from the Chilean National Health Service.

Plants and their parts, either in their natural state or processed, require both a phytosanitary certificate issued by an authority in the country of origin (usually, the Australian Quarantine and Inspection Service, or relevant state department of agriculture) and permission for entry from the Department of Plant Quarantine in Chile.

To obtain permission the importer must submit a written application along with the phytosanitary certificate to the Department giving details of the plants or products and of the individual shipments and requesting inspection.

Drugs, cosmetics and pharmaceuticals must be registered and authority to import must be obtained from the Seccion Farmacia of the National Health Service by a legally appointed local representative of the maker. The application must be supported by:

• A Chilean consular certificates stating that the product is officially accepted for distribution in the country of origin.
• A declaration of the formula and the manner of proving it, if necessary.
• Full details of the therapeutic qualities claimed, dosage etc.
• Sufficient samples to enable easy analysis to be made.

Setting up in Chile

There are two ways to operate a business in Chile.

1. Through a representative
2. By setting up a Chilean branch or agency of a non-resident foreign corporation

Types of companies that may be set up in Chile

Under Chilean commercial law, the following types of partnerships or corporations can be formed:
 

• Corporation ('Sociedad anónima')
  The 'sociedad anónima' (corporation) is a body corporate that results from the forming of a single equity contributed by the shareholders. The shareholders' liability is limited to the amount of their individual contributions. The corporation can be publicly traded or closely held and its affairs are administrated by a Board of Directors whose members can be replaced at any time.
  
  Chilean law considers that a corporation's activities are always mercantile, even though it is formed to carry out acts that would otherwise be deemed to be civil.
  
  
• General partnership ('sociedad colectiva')
  In a general partnership all the partners administrate the company individually or through an elected representative. Each partner is solely responsible for all of the legal liabilities of the partnership.
  
  
• Limited liability partnership ('sociedad de responsabilidad limitada')
  A limited liability partnership is similar to a general partnership. The principal difference is that each partner's liability is limited either to the amount of capital he contributed or to a greater amount specified in the partnership deed.
  
  A limited liability partnership is formed by means of a notarised deed that should contain the items required for a general partnership deed. The name of a limited liability partnership should contain the name of one or more partners or a reference to the partnership's object. However, the name must end in the word 'limitada' (limited); otherwise, each partner is unlimitedly liable for all the partnership's liabilities.
  
  Filing of a summary with the Register of Commerce is also required within 60 days. The summary must also be published in the Official Gazette within the same 60 day period.
  
  
• Limited partnership ('sociedad en comandita')
  In a limited partnership some partners provide all or a part of the partnership's capital with no right to manage the partnership's affairs. These partners have limited liability.
  
  
• Association
  An association ('asociación' or 'cuentas en participación') is a contract between two or more businessmen or entities to share in one or more commercial transactions, which will be carried out by one of them in his own name. Such partner must render an account to his other partners and share with them any profit or loss that might result.
  
  The association only creates rights among the partners. As far as third parties are concerned, only the partner in whose name the transaction is carried out is responsible. There are no legal requirements for forming an association.

Taxation

All business enterprises are subject to a 15 per cent First Category tax on accrued taxable income. A 35 per cent additional tax is imposed on the repatriation or distribution of profits, but a credit is given for the First Category tax. Therefore, once remitted, foreign investors normally pay a total tax on profits of 20 per cent.

Partnerships are taxed as separate taxpayers.

All imported goods must pay an 18 per cent Value Added Tax (VAT) calculated on the cost, insurance and freight (CIF) value, plus a eight per cent uniform tariff (ad valorem). Importers generally recover taxes paid on imports and in some cases importers can defer payment of duties and VAT for up to five years.

Exemptions include capital goods authorised by the government, goods imported by the Ministry of the National Defence, goods imported by international organisations and diplomatic missions and goods imported under the temporary admission system.

An import registration tax of three per cent on the CIF value (Incoterms 1990) is levied on all import and is paid at the issue of the Informe de Importacion. The tax value is deducted from the import duty payment on import.

A surcharge is levied on entry on some luxury goods such as motor vehicles, fine jewellery, alcoholic beverages, tobacco, fur, and some textile goods.

Intellectual property protection

Chile has signed a large number of free trade agreements of which intellectual property protection is a structural component. Although Chile is moving in the right direction to promote innovation as the key to sustained long-term growth, it still faces important challenges regarding the proper protection of intellectual property rights. 

Manufacturers and traders are strongly advised to patent their inventions and register their trademarks in Chile, and to do so through a patent or trademark agent. 

Applications for patents must be made before the invention becomes known in Chile.