Chile is implementing a new tax law that obliges overseas providers of OTT and e-commerce services to pay VAT from 1st June 2020.
The 19% VAT rate will apply to all multinational companies that deliver services within Chile without having a physical presence in the country. This includes firms such as Airbnb, Amazon, HBO Go, Netflix and Spotify. Payments will be made on a quarterly basis.
The tax change is part of Chile’s Tax Modernisation bill which has been signed into law by the country’s president, Sebastian Pinera. The president noted that the bill is aimed at boosting tax revenues by US$2.2 billion, equating to around 0.6% of Chile’s GDP.
The legislation specifies that companies will be required to pay VAT for “the delivery of digital entertainment content, such as videos, music, games and similar, via download, streaming or other technology, including texts, magazines, newspapers and books”.
Additionally, VAT will apply to overseas firms providing advertising services, data storage and software services. Transport services are a notable exception; while companies such as Uber will not yet be required to pay VAT, this is because Chile’s parliament is currently debating a separate bill exclusively focused on the transport sector.