Doing business
Current business situation
The Australia-Chile Free Trade Agreement (ACI-FTA) came into effect on 6 March 2009. The Agreement provides Australian businesses with significantly improved market access by eliminating immediately 92 per cent of tariff lines on 97 per cent of Australian goods currently traded; includes exports of coal, meat, wine and key dairy products. Tariffs on the remaining Australian export goods will be eliminated by 2015.
Reflecting the government’s focus on helping services suppliers, the FTA also includes commitments by Chile to maintain an open and non-discriminatory market for Australian services; including in important sectors for Australia such as education, professional services, mining, engineering, management consulting, and financial services.
Business culture
Any Australian business looking to conduct business in Chile will need to take local cultural dynamics into consideration. The following is a basic guide to some of the basic considerations business representatives should be aware of.
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 opportunity or not.
When conducting business, consideration must be taken with dressing well, as personal presentation is a priority in Chile and is perceived as a sign of respect. Dress conservatively and formally. Be aware that the 'business casual' look of sports jackets, 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.
Setting up in Chile
There are two ways to operate a business in Chile.
- Through a representative
- 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’s liability is unlimited 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.
Links and resources
Government, business and trade
Australia-Latin America Business Council – www.alabc.com.au
Chilnet Business Directory – www.chilnet.cl
Foreign Investment Committee – www.foreigninvestment.cl
News and media
Business News Americas – www.bnamericas.com
Chile Post – www.chilejournal.com
Please note: this list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only.
Top Business Risks
Australia-Chile Free Trade Agreement
The ACI-FTA immediately eliminates 92 per cent of tariff lines on 97 per cent of Australian goods currently traded.
More information on the ACI-FTA
OECD Guidelines for Multinational Enterprises
Multinational Enterprises should be aware of the OECD Guidelines for Multinational Enterprises that provide voluntary principles and standards for responsible business behaviour in a variety of areas, consistent with applicable domestic laws. These Guidelines are endorsed and promoted by the Australian Government. For more information, go to the AusNCP website.
APEC Business Travel Card Scheme
Managed by the Department of Immigration, the APEC Business Travel Card Scheme was developed to make travelling within the 21 APEC member countries much simpler and more efficient.
Bilateral agreements
Australia has social security agreements with several countries that address the issue of 'double super coverage' for employees sent to work overseas. To take advantage of these agreements, Australian employers sending employees overseas to work must apply to the Tax Office for a Certificate of coverage.
For more details, please visit the Australian Taxation Office website.