your guide to business + legal success in latin america
TRANSCRIPT
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Regional Impact Global Leadership
Council of Great Lakes Governors Co-Chairs:
Illinois Governor Pat Quinn and
Michigan Governor Rick Snyder
Zoë Munro, Program Manager
Conference of Great Lakes and
St. Lawrence Governors and Premiers
SOUTH AMERICA TRADE MISSION
Conference of Great Lakes and
St. Lawrence Governors and Premiers
Conference formed in June, 2015
Chief executives of Illinois, Indiana,
Michigan, Minnesota, New York,
Ohio, Ontario, Pennsylvania, Québec
and Wisconsin are working as equal
partners to grow the region’s $5 trillion
economy and protect the world’s
greatest freshwater system.
The Council of Great Lakes Governors
serves as secretariat.
Council of Great Lakes Governors Co-Chairs:
Illinois Governor Pat Quinn and
Michigan Governor Rick Snyder
Economic Development
International Trade and
Investment
Maritime
Tourism
Environmental Protection
Priorities
Water Management
Aquatic Invasive Species
Conference of Great Lakes and
St. Lawrence Governors and Premiers
Regional Leadership Global Impact
Region’s economy is 3rd largest
“country” GDP in the world
One of the country’s
emerging mega regions
Centralized location with
outstanding market access
Extensive air, rail, road and
maritime transportation systemwww.bmo.com
Regional Leadership Global Impact
Santiago, Chile
Toronto, Canada
São Paulo, Brazil
Johannesburg, South Africa
Shanghai, China
Sydney, Australia
United Kingdom
Germany
Trade Office
Tourism Office
New Delhi, IndiaMexico City, Mexico
CHICAGO, ILLINOIS
Headquarters
Trade Office
LONDON, UNITED KINGDOM
BERLIN, GERMANY
Export Missions
Québec – 2015
Mexico – 2015
Czech Republic, Poland and Turkey – 2014
India – 2014
Colombia, Chile and Brazil – 2012 & 2013
Australia – 2006, 2009 & 2013
South Africa – 2007, 2011 & 2013
Dubai, Abu Dhabi and Qatar – 2012
Indonesia, Vietnam and Thailand – 2012
Brazil, Chile, Peru - 2010
Australia & New Zealand – 2009
Argentina, Brazil & Chile – 2004 & 2008
CGLSLGP Trade Missions have assisted over 300 Great Lakes
companies to export their products and services to 20 international
markets
South America Trade Mission 2015
• Multi-sector trade mission to Brazil, Chile and
Colombia October 17-27, 2015
• São Paulo, Santiago and Bogotá
• Customized one-on-one business appointments
with interested distributors, agents and other
prospective business partners set up by the
CGLSLGP Trade Office (average 2 – 4
appointments per day)
• Brief market overview including industry sector
information and target company profiles
South America Trade Mission 2015
• In-country market business briefings
• In-country staff support of CGLSLGP Brazil and Chile
Trade Offices. Chile Trade Office covering Colombia.
• Group airport-hotel-airport ground transportation in all
three cities
• Assistance with hotel bookings, drivers and interpreters
South America Trade Mission 2015
Itinerary
Saturday, October 17
Sunday, October 18
Depart U.S. for São Paulo, Brazil
AM: Arrive São Paulo
PM: Country Business Briefing and Networking
Dinner
Monday, October 19 Individual Business Appointments in São Paulo
Tuesday, October 20 Individual Business Appointments in São Paulo
Wednesday, October 21 AM: Fly to Santiago, Chile
PM: Country Business Briefing and Networking
Dinner
Thursday, October 22 Individual Business Appointments in Santiago
Friday, October 23 Individual Business Appointments in Santiago
Saturday, October 24 Free day in Santiago
Itinerary Continued
Sunday, October 25 AM: Depart for Bogotá, Colombia
Monday, October 26 Individual Business Appointments in Bogotá
Tuesday, October 27 Individual Business Appointments in Bogotá
Late PM: Fly back to US (pending flight schedules)
Wednesday, October 28 AM: Fly back to US
South America Trade Mission 2015
Mission Logistics
• Drivers/Interpreters
• Hotel Block Bookings
• Group Inter-Country Flights
• Group Ground Transport
• Visa Invitation Letters
• Travel/Medical Insurance
CGLG Trade Mission Website
Website: http://www.cglg.org/projects/international-trade/trade-
missions/south-america-mission-2015/
South America Trade Mission 2015
Mission registration deadline: August 19, 2015
Mission Participation Fee US$ 995
per person
Brief Market Research and Appointment Setting
Brazil US $ 3,852
Chile US $ 2,500
Colombia US$ 2,600
Grant funding available in many states
Main goal: To assist SMEs from the Great Lakes
region or Canada looking to export products and
services to Brazil, Chile and Colombia
*varies by state
Website: http://www.cglg.org/projects/international-trade/trade-
missions/south-america-mission-2015/mission-costs/
October 17-27, 2015
Other Mission CostsCosts Paid Directly by Participants
(All costs below are estimated and will depend on exchange rate at the time of the
mission)
International Airline Ticket $1,800 USD Approx.
US-Sao Paulo, Santiago & Bogotá
Each participant will make their own flight arrangements to travel both to/from
and within the South America. Recommended group flight times will be provided.
Hotels
Sao Paulo, Santiago, & Bogotá (10 nights) $2,3000 USD Approx.
The Council will reserve a block of discounted rooms at hotels in Sao Paulo,
Santiago and Bogotá.
Material translation – website, business cards, materials (Portuguese and
Spanish)
Other Mission CostsAll fees are approximate
Transportation to Meetings
Brazil: $600 USD per day
Combines driver and interpreter fee
Santiago: $20 USD per hour
Bogotá: $320 USD for 9 hours
Interpreters
Brazil see above
Santiago: $260 USD for 9 hours
Bogotá : $380 USD for 8 hours
Material translation – website, business cards, materials to Portuguese and
Spanish
Brazil Business Visa Fee $160 USD
CGLSLGP FY15-16 TRADE MISSIONS
Brazil, Chile and Colombia: October 17-27, 2015
São Paulo, Santiago and Bogotá
Germany and the United Kingdom: March 1-9, 2016
Frankfurt (base) and London (base)
China: May 7-14, 2016
Shanghai, Guangzhou and Beijing
Kazakhstan and Azerbaijan: June, 2016
Website: http://www.cglg.org/projects/international-trade/trade-
missions/
Trade Mission Feedback“The South America trip that was organized by the Council of
Great Lakes Governors was simply outstanding. All three
countries we visited were very productive from a business
standpoint. The potential customers that CGLG prequalified
and set up for us to meet were exactly the type of customers
we want to do business with. As we visited these potential
customers, the interpreters were very professional and smart.
In the short time we were with them, they picked up our
industry lingo and knew our product very well.
The entire experience was nothing short of great! We look
forward to going on another trade mission trip in the future!”
Jeremy Sizer and Jodi Boldenow
Industrial Door Co. Inc, Minnesota
"As an international business developer, I have worked with
other US agencies for similar trade services. I do have to admit
that this is by far the best experience I’ve had. I was very
impressed by the thoroughness and enthusiasm in not leaving
any stone unturned in peruse of any potential opportunities for
my company. In all honesty, I was concerned about meetings
schedule crossing the country. However, the planned logistics
were impeccable making my time in Australia both effective and
efficient.
I would with all confidence recommend both the Council of
Great Lakes Governors and the CGLG Trade Office in
Australia.”
Nalex Cordova
Blair Rubber, Ohio
Trade Mission Feedback
Questions?
Zoë Munro
Program Manager
20 N. Wacker Dr., Suite 2700
Chicago, Illinois 60606
Email: [email protected]
Phone: +1 312 407-0177
Website: www.cglslgp.org
“Your Guide to Business + Legal Success in
Latin America”June 28th, 2015
Let the U.S. Commercial Service
connect you to a world of opportunity.
Presented by
Amy Freedman
US Commercial Service, Cleveland
US Commercial ServiceThe U.S. Commercial Service is the export arm of the U.S. Department of
Commerce’s International Trade Administration. With offices throughout
the United States and in U.S. Embassies and consulates in nearly 80
countries, the U.S. Commercial Service utilizes its global network of trade
professionals to connect U.S. companies with international buyers
worldwide.
Export.gov/LookSouth Amy Freedman
What is Look South?
• LOOK SOUTH is a coordinated Federal Government effort led
by the U.S. Department of Commerce to help more American
companies “Look South” to do business with FTA countries
• Export promotion
• Trade Winds
• Trade Missions
• IBP
• Financing
• SBA
• OPIC
• Training and Education
• US Trade & Development Agency
• Procurement Initiative
• Strategic Partnerships
• Chambers
• Private companies
Mexico is our second-largest
trading partner (Canada is the
largest), with record U.S.
merchandise exports of $216.3
billion in 2012. This “LOOK
SOUTH” campaign encourages
more than 54,000 U.S.
companies already exporting
to Mexico to expand exports to
other Latin American markets.
Look South Target Markets
7/28/2015 International Trade Administration 26
U.S. FTA partner markets in
Latin America:
• Mexico
• CAFTA-DR
• Panama
• Colombia
• Peru
• Chile
FUN FACT: Latin American
countries are developing their own
SBDC-like networks, with the
support of the U.S. State
Department. These SBDC-like
networks will become part of the
Small Business Network of the
Americas (SBNA).
7/28/2015 27International Trade Administration
Look South target markets show great opportunity
Stable, growing economies
• Target market GDP growth averages 4.7%
Untapped markets
• Growing middle class seeks new products
Favorable trade policies
• Free trade agreements, regional integration, reduced trade barriers
7/28/2015 28International Trade Administration
U.S. products ideal for meeting latent demand
Automotive Parts and Supplies
• A growing middle class has led to more car ownership, including U.S. brands, raising the demand for U.S. auto parts.
Construction Equipment
• Growth in infrastructure projects, housing, and mining development all demand construction equipment.
Medical/Healthcare Equipment
• Growing incomes and increased social safety nets in these markets lead to growing sales.
Markets have favorable policies for doing business
7/28/2015 International Trade Administration 29
Free Trade Agreements
• Provide U.S. goods with favorable tariff treatment, government procurement opportunities, legal and intellectual property rights protections, among others.
Regional integration
• Integration of regional trade blocks such as Central America and the newly formed Pacific Alliance, builds common markets, regulatory regimes, and product standards, and allows for accumulation of origin.
Active U.S. engagement
• USG agencies are actively engaged in the removal of policy barriers in target markets through programs such as the Customs and Border Management Program and the Standards Alliance.
Look South Resources
• Commercial Service in each target market.
• Full trade event and webinar schedule.
• Export.gov/LookSouth.
• Coordinated support from other government agencies, partner networks.
7/28/2015 International Trade Administration 30
• Export.gov/LookSouth.• Newsletter registration.
• Market and sector reports.
• Promo and Fact Sheets.
• Spotlights: missions, shows, conferences, webinars.
• Social Media: regular blogs and tweets.
• Financing.
• Policy support.
• Direct Line calls.7/28/2015 31International Trade Administration
Look South Toolkits
• August 2015
• Brazil Health IT Trade Mission
Mon, 8/17/2015 – Thu, 8/20/2015
Sao Paulo, Brazil
• September 2015
• Inter-American Dialogue: Latin America Clean Transport
Forum
Wed, 9/02/2015
Mexico City, Mexico
*This event will be held in Spanish
• Franchise Trade Mission to Central America
Sun, 9/20/2015 – Sat, 9/26/2015
San Jose, Costa Rica
• 32nd Perumin Mining Convention
Mon, 9/21/2015 – Fri, 9/25/2015
Lima, Peru
• International Buyer Program (IBP): Pack Expo
Mon, 9/28/2015 – Wed, 9/30/2015
Las Vegas, NV
• October 2015
• CONEXPO Latin America
Wed, 10/21/2015 – Sat, 10/24/2015
Santiago, Chile
• Discover Global Markets: Pacific Rim Consumers
Thu, 10/29/2015 – Fri, 10/30/2015
Orange County, CA
• November 2015
• American Water Works Association Trade Mission to South
America
Sun, 11/15/2015 – Sat, 11/21/2015
Santiago, Chile and Bogotá, Colombia
• SelectUSA Canada 2015
Tue, 11/17/2015
Toronto, Canada
• International Buyer Program (IBP): Greater New York Dental
Meeting
Fri, 11/27/2015 – Wed, 12/2/2015
New York, NY
• December 2015
• Enterprise Florida Export Sales Mission to Honduras
Tue, 12/1/2015 – Thu, 12/3/2015
Tegucigalpa, Honduras
• SelectUSA Brazil Road Show
Tue, 12/1/2015 – Fri, 12/4/2015
Rio de Janeiro, São Paulo, Belo Horizonte, Brazil
• Houston: Gateway to the Americas
Mon, 12/2/2015 – Wed, 12/4/2015
Houston, TX
Upcoming Trade Events
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in Latin America
Sr. Director & GM, Latin America Consumer Business Group 20+ years experience in the international business sector, specifically LATAM
Global Lawn & Garden Industry
Latin America L&G industry
Why venture into LATAM? Mexico?
Challenges Regulatory
Business Practices
Logistics
Opportunities Business Expansion
M&A
‘Testing the Waters’
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My Background
Before joining Kegler Brown in 2011, lived in São Paulo Brazil and worked in a Brazilian law firm
2012 Council of Great Lakes Governors Trade Mission to Brazil, Chile and Colombia participant
2014 Greater Columbus Sister Cities International, Inc. Curitiba, Brazil delegation member
MBA course instructor at The Ohio State University
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Designed, developed and lead multinational global business MBA course at The Ohio State University,
Fisher College of Business
MBA Course Instructor
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Course Accomplishments
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Course Accomplishments
Managed three MBA consulting teams and related
projects for U.S. multinational business.
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Course Accomplishments
Analyzed Brazil macro political, economic, social,
and technological considerations.
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Course Accomplishments
Analyzed Brazil’s outlook for growth with leading
global economist.
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Course Accomplishments
Analyzed regulatory and policy trends, with experts
from U.S. DoS.
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Course Accomplishments
Analyzed structured trade and export finance
solutions, with representatives of HNB.
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Course Accomplishments
Analyzed Brazil market entry and organizational
structure considerations.
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Course Accomplishments
Analyzed employment and other relationships in
Brazil – including Brazil specific labor, agent, and
distributor considerations.
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Sample LatAmExperience
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Sample LatAmExperience
Managed acquisition of Dow Chemical Company
polyolefin films facility by Brazilian manufacturer.
Transaction included not only physical real estate
assets, but also certain intellectual property,
strategic corporate tax planning, environmental
implications and tax incentives.
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Sample LatAmExperience
Managed acquisition and post acquisition
integration of Brazilian software company by Santa
Monica based U.S. technology company.
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Sample LatAmExperience
Assisted U.S. publically traded company with
development of Brazilian market entry strategy.
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Sample LatAmExperience
Negotiated and drafted definitive agreements
related to acquisition of assets, including robotic
equipment and tooling, in Mexico, by U.S.
publically traded company.
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Sample LatAmExperience
Negotiated and drafted supply agreements for use
by U.S. publically traded company in Mexico.
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Sample LatAmExperience
Managed drafting and negotiation of Uruguayan
distribution agreement related to farm and
compact construction equipment.
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Sample LatAmExperience
Managed drafting and negotiation of Brazilian
distribution agreements in software and
manufacturing industries.
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Sample LatAmExperience
Developed and provided anti-corruption training to
publically traded U.S. company employees in Brazil.
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Import Export Process
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State
DepartmentDirectorate of Defense
Trade Controls (DDTC)
Arms Export Control Act
International Traffic in Arms
Regulations ITAR
22 C.F.R. Parts 120-130
UML - U.S. Munitions List
Commerce
DepartmentBureau of Industry and
Security (BIS)
Export Administration Act
Export Administration
Regulations (EAR)
15 C.F.R. Parts 700-799
CCL - Commerce Control
List
Treasury
DepartmentOffice of Foreign Assets
Control (OFAC)
Trading with the Enemy Act,
Int’l Emergency Economic
Powers Act
Iraq Sanctions, Terrorism
Regulations, and Others
31 C.F.R. Parts 500-599
List of Specially
Designated
Nationals +
Blocked Persons
Cuba
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Import Export Process
Tax/DutyRadar
Obtain
importing
license
(if required)
Register with the
governmental
registration
system
(if required)
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General Import Taxes + Duties
II-Import Dutyvaries based on product
& Country of origin
(NCM, HS)
0-35% Import Duty0-5% raw materials, 20%
finished consumer
goods, 35% autos and
luxury items
0-35%
12%
avg
Import Duty 6%
IPI-Industrial
Product TaxVaries based on product
(CNM) up to 300%
tobacco
20% avg VAT 16% VAT 19%
PIS-Social
Integration Program
Contribution
1.65%
COFINS-Social
Security Financing
Contribution
7.6%
ICMS-State Tax 7-25%*
SP 18%
*Current legislation and recent Supreme Court
decisions may impact the applicable ICMS rate.
Decree 8,426/15 – effective this month (July 2015)
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Additional Tax Considerations
On average, firms make 9 tax
payments per year and spend
2600 hours per year filing,
preparing and paying taxes
Brazil: 2,600
LatAm: 366
OECD: 175
Corporate TaxPlus 10% on taxable
income over R$240,000
-may choose deemed
profit system if under
threshold
15% Corporate Tax 34% Corporate Tax 20%
Transfer Price
ConsiderationsYes Transfer Price
ConsiderationsYes Transfer Price
ConsiderationsYes
Source: World Bank, Doing Business 2012
On average, firms make 9 tax
payments per year and
spend 239 hours per year
filing, preparing and paying
taxes
On average, firms make 9 tax
payments per year and
spend 291 hours per year
filing, preparing and paying
taxes
Baseline:+ medium size business
+ taxes and mandatory
contributions are
measured at all levels of
government
+ a range of standard
deductions and
exemptions is also
factored
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Brazil Ex-Tarifário Program
Tariff reductions generally reduce the applicable tariff from to 0-2% and may also reduce IPI (Resolução CAMEX 35/2006)
Importer must file for the Ex-tarifário
Certificate or statement from appropriate body, technical reports, public consultation among other things may be considered to determine the existence of a similar domestic good
If no similar good is
produced domestically,
an importer may
qualify for reduced or
eliminated tariffs
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Importer May Qualify If:
Higher quality product or service
Higher productivity of equipment
Increased efficiency
Reduced delivery time
Other specific performance factors may be considered depending on product
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ICMS credit to
importer
PIS/COFINS reducedII/IPI 0%
or 88% reduction
IRPJ reduced 75%
Free TradeManaus Free Trade Zone – ZFM
Western Amazon – AO
Free Trade Areas - ALC
General Process
Cert of importer eligibility on the SISCOMEX
Classification of imported goods HS / NCM
Submit Invoice
Register Transaction on SISCOMEX
Import Licenses
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MERCOSUL Southern Common Market
Free from import duty with certificate of origin
Exceptions to Common External Tariff (CET)
Brazil is permitted 93 exceptions to the CET
June 2009 trade minister raised several import duty rates
Mexico/Brazil revised auto tariff structure
Decision No. 39/11 of the Mercosul Common Market Council permits and outlines procedures for the countries to negotiate these topics
Member Countries
+ Brazil
+ Argentina
+ Uruguay
+ Paraguay
+ Venezuela
Applied
+ Guyana
+ Suriname
Associate Members
+ Bolivia
+ Chile
+ Colombia
+ Ecuador
+ Peru
Observer of
Agreement
+ Mexico
+ New Zealand
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Pacific Alliance
Latin America (NO BRAZIL) trade bloc
Members:
Chile
Colombia
Mexico
Peru
Observers 30+ Countries:
+ Costa Rica
(currently applying for membership)
+ Panama
+ Finland
+ India
+ Israel
+ Singapore
+ Canada
+ U.S.
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Level of corruptionTransparency International, 2014 CPI index
The abuse of entrusted power for private gainPerception of corruption in public sector
2014USA: 17th of 175Brazil: 69th of 175
1995 (year 1 of CPI)USA: 15 of 41Brazil: 36 of 41
P E S TPolitical Risk
+ The ability of government to respond to political risk
+ The ability of government to NOT cause political risk The unit of
measurement
for political risk
is STABILITY
Denmark
1st
USA
17th
Chile
21st
Brazil
69th
India
85th
Colombia
94th
China
100th
Russia
136th
North
Korea,
Somalia
174th
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FCPA
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About the FCPA
Applies to U.S. companies, citizens, foreign subsidiary, officer, director, employee, or agent of a U.S. company or its foreign subsidiary, any stockholder acting on behalf of the company, foreign companies with U.S. registered securities
Scope and operation of FCPA not restricted to USA territorial boundaries
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Facts about the FCPA
U.S. has pursued 3.5 formal foreign bribery enforcement actions for every one action pursued by all other countries
Companies settle, pay fines and forfeit profits
U.S. Justice Dept. continues to focus on individuals
Guilty employees go to jail, pay fines and must make restitution
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Best Practices
Contract
Review
Compliance
Program +
Culture
Financial
Controls
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Agents + Distributors
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Questions to Ask
What is the relationship?
Is a written agreement required?
Rights and duties?
Termination?
Permanent establishment?
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Agent DistributorActivities subject to some control by supplier Activities subject to only minimal control by
supplier
Does NOT take title to goods Takes title to goods, buys and sells for own
account
May handle products of other suppliers; but, is
less likely to do so than distributor
May handle products of other suppliers
Generally compensated on a commission basis Earnings based on resale profit margin
Usually does not warehouse goods Usually warehouses and physically delivers goods
Usually does not use own capital Uses own capital
Bears no risk of failure of payment Bears economic risk of failure of payment by
customer
May have power to contract on behalf of the
supplier
Has no power to bind the supplier contractually
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Agent Distributor
Creation Statutory requirements Contract law
Compensation CommissionSells on own account
Termination Enumerated “just cause” reasons Contract law
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Best Practices
If properly structured commercial representative and distributorship agreements may require less up-front investment than a more direct presence in the market.
Tradeoff for this can be less control over how product is promoted, sold and serviced in the market.
Using commercial representatives or distributors may make sense as a means to first enter the market or even as a permanent business model.
If proper safeguards are not in place, mismanagement of product by commercial representative or distributor can permanently damage a brand.
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Best Practices
Foreign companies should structure commercial representative and distribution agreements with a long-term strategy that preserves maximum flexibility and may include a future more direct presence in the market. For this strategy to work, well-crafted written agreement is imperative.
Care must be exercised to not blur the distinctions between a commercial representative and a distributor.
Long term exclusive contracts should generally be avoided. In some countries, short term contracts once renewed may be considered contracts for "indefinite terms" after the first renewal, by some courts.
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Best Practices
Minimum sales requirements should generally be established in the agreement.
Standards for product service and maintenance should generally be set out in the agreement.
Generally, regular and adequate reporting should be required.
Other key points to address often include termination and causes for termination, distribution points and control over distribution in case of termination.
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VisasTemporary
Visas
Technical Visas
Permanent
Visas
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Data Protection
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Legal Advice
The content of this presentation is for educational purposes only. Each legal issue is fact dependent, this presentation should not be used or viewed as legal advice; your legal counsel should be consulted on the application of your particular factual situation to the current law.
BrazilTAX
Corporate Tax RateTop marginal corporate tax rate stands at 34 % in Brazil
Break down of 34%
◦ 15 % Basic rate
◦ 10% Surtax on income above BRL 240,000 per year (approximately $ 800,000)
◦ 9% Social contribution on pre-tax profits
◦ Losses can be carried forward indefinitely
◦ Dividends are not subjected to withholding taxes on profits generated on or after Jan 1, 1996
Importation of Royalties and Services
◦ 15% withholding tax for Royalties from patents knowhow and services
◦ PIS, CONFIS, and CIDE total 19.25%
Historically the tax rates have been consistent
Repatriation
Generally there are no restrictions on repatriation of earnings. The investors must register the original investment and any capital increases/ earnings with BACEN (Banco Central do Brasil)
Repatriations of originally invested capital are subject to withholding tax t 15%
Over the past few years all levels of government have increased incentives to attract foreign investments
Assuming the dividend paid was after Jan 1, 1996The example considers Federal Taxes only
Example
Rate Dividend Services Royalties
Pre tax income 1,000,000 1,000,000 1,000,000
Basic rate 15% (150,000.) (150,00) (150,000)
Surtax 10% (100,000) (100,000) (100,000)
(PIS & COFINS) Social Contribution 9% (90,000) (90,000) (90,000)
Withholding 15% - (99,000) (99,000)
PIS/COFINS/CIDE 19.25
Effective Tax RateAll earnings paid out asdividends
All earnings used to import services
All earnings used to import know how
withholding tax creditable/(not creditable) in US 34% 56.6%/47% 56.6%/47%
660,000 433,950/531,300 433,950/531,300
ChileTAX
Corporate Tax Rate in ChileCorporate tax rate stands at 20% in 2015 and are expected to go up to 22.5% in 2016
◦ The tax rate has been in the range of 17%-20% from 2006 to 2015
◦ 35% withholding tax rate for dividends and capital gains for foreign investor
◦ 20% withholding tax rate for payments made for engineering, technical assistance or technical services rendered abroad
◦ The rates have been on an upward trajectory since 2011
Repatriation
The capital may be repatriated one year after the date of investment and gains can be repatriated as soon as they become available
Tax treaty signed with the US, still waiting ratification by Chilean Congress
The taxes considered are at the Federal level only
Example
Rate Dividend Services Royalties
Pre tax income 1,000,000.00 1,000,000.00 1,000,000.00
Corporate Tax Rate 20% (200,000.00) (200,000.00) (200,000.00)
Withholding 20% - (200,000.00) (200,000.00)
Tax rate for dividend 35% (280,000.00) - -
Return 520,000.00 600,000.00 600,000.00
ColombiaTAX
Corporate Tax Rate in ColombiaCorporate tax rate stands at 25% in 2015 and 2016
◦ The tax rate have been consistent at 25%
◦ Corporate income tax for equality rate- 9% (applies to corporate tax payers required to file return)
◦ Capital Gains are taxed at 10%
◦ Dividends paid to nonresidents without a branch or PE in Colombia are not subject to tax if the dividend are paid out of profit taxed at corporate level. If the dividends paid are paid out of profit not taxed at corporate level are subject to 33% withholding tax
◦ Withholding tax of 26.4% for software royalties and 10% withholding tax for technical service, technical assistance or consulting services
◦ Municipal and state taxes may apply
Repatriation
Foreign investment needs to be registered with the central bank
The government has the authority to restrict remittance if the international reserve fall below 3 months worth of imports (The reserve have been above this level for decades)
No tax treaty in place yet with the US
The taxes considered are at the Federal level only
Example
Rate Dividend Services Royalties
Pre tax income 1,000,000.00 1,000,000.00 1,000,000.00
Corporate Tax Rate 25% (250,000.00) (250,000.00) (250,000.00)
Corporate Tax Rate for equality 9% (90,000.00) (90,000.00) (90,000.00)
Withholding for Services 10% - (66,000.00) -
Withholding for Royalties 26.4% - - (174,240.00)
Return 660,000.00 594,000.00 485,760.00