International Tax Compliance

Our highly professional team provides qualified international taxation services to advise the cross-border transactions of our clients. 

International Taxation Performance 

The mercantile opening and Chilean introduction in this business logic have boosted the national economy dynamism. Simultaneously, local and international regulations have been adapting to the new business models to regularize and protect interests worldwide, both for on and offshore businesses. 

It is increasingly common for Chile to receive foreign investors from Latin America, North America, and Europe, as well as for resident companies in Chile to trade abroad. It clarifies International Taxation and how to take advantage of all the existing tax benefits for actual profitable businesses. 

International Taxation Significance 

Global companies require global tax planning. It is not enough for multinational companies to separately adapt to each of their local operating environments. Local, regional, and national factors must be considered to make successful multinational companies thrive and adapt to all their environments. Taxation is one of the most significant variables due to its determining function to select corporate structures appropriately, thus locating intellectual property and configuring global supply chains to mitigate global effective tax rates. 

Basic Principles of International Taxation 

There are two basic principles: The residence principle (supported by the world’s rich countries or capital exporters) and the source principle (supported by developing countries or capital importers). Both are negotiated in agreements to avoid double taxation. 
  1. Residence Principle: The specialist argues that “income tax must be paid in the country where the companies operate, are incorporated, or reside.” In addition, companies based in a territory receive state services: Internal and legal security, among others. 
  2. Source Principle: “Non-resident organizations must pay the local income tax. It occurs in the specific case where their wealth is generated in the same place where they operate.” 
On the other hand, there are some basic principles with which the State and the companies must be consistent to improve international business or transactions in markets worldwide. Among the main ones are: 
  1. Equity Among Governments: The States have ethical and fair management regarding the tax distribution to stand locally as long as possible where the income is generated. 
  2. The Neutrality Principle: Taxation does not operate as an absolute criterion for the company or investor to invest. States should promote investments for positive results for their territories and not hinder them. On the other hand, there should be no preferences for one organization or another. 
  3. Mechanisms Against Tax Evasion: This is one of the most important due to the enactment of specific rules to prevent the use of legal loopholes by some companies to avoid taxes. There are rules and measures for governments and regulatory institutions to work together. 
  4. Promotion of Mutually Beneficial Trade Relations: A country’s policies, standards, practices, and communication models should favor investment, especially for jobs, infrastructure, and development. 
Finally, International Taxation principles may change, not constantly, and adapt to new governmental or business trends. Countries adjust their rules to assist companies to invest fairly and profitably but without neglecting local progress. 

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