06/02/2018
If you are self-employed emitting “Boletas de Honorarios” in Chile, then you’ll want to know about an important change at the “SII”, Chile’s tax authority, effective as of January 2018. We found this 2-minute video which explains the change – but if you don’t speak Spanish – we’ve provided a summary in English below: https://youtu.be/tR2XoJ3qJdU
ENGLISH SUMMARY:
If you are self-employed in Chile and receive your income via “Boletas de Honorarios” then listen up because this change will affect the amount and frequency with which you need to pay your taxes. Starting January 2018, you will be required to pay just over 20% taxes to the state: 10% of which will go to AFP, 7% to your Isapre or Fonasa, 1.4% for disability insurance, 0.95% for workplace accident insurance, and *up to* 1.48% commission charged by your chosen AFP.
There are two ways you can fulfil your SII tax obligation:
1) Every month, log-in to your Previred.cl account to pay 20% of your taxable income plus the standard 10% Previred withholds, and at the end of the taxable year, you will receive a tax refund equivalent to the 10% that Previred withheld
2) SII will withhold 10% of your taxable income every month that will be used to cover the AFP payment, but the following year you will not receive a tax refund and you will likely have to pay another 10% in taxes in one lump sum to cover your health, disability and workplace accident insurance that accumulated in the previous year
It is important to note that if you opt for the second option, you will likely end up paying for healthcare coverage (i.e. Isapre or Fonasa) for the previous year that you were not permitted to use; whereby, if you pay every month via the first option, you will benefit from Isapre or Fonasa healthcare coverage throughout the applicable year.
As EBG International is a financial planning firm and does not provide legal or accounting advice, this post should be used for informational purposes only and should not be relied upon for legal or accounting advice. While we use reasonable efforts to provide you with accurate and up-to-date information, please consult an accountant before engaging in any transaction and to answer any questions or concerns you may have about this important matter.
At EBG International, what matters to you also matters to us, which is why we strive to share helpful information such as this with the ExPat and Latin American community. If you are seeking financial planning advice, do not hesitate to DM or email [email protected] to schedule a consultation.
