Chile Tax Agency Clarifies Tax Treatment of Software Licenses From Nonresident Service Providers

The Chilean Internal Revenue Service Nov. 27 issued Letter No. 2452, clarifying the tax treatment of software licenses from nonresident service providers. The taxpayer, a Chilean entity that wasn’t a VAT taxpayer, inquired as to the tax treatment of acquiring a software license from a Spanish service provider. The Tax Agency clarified that: 1) amounts paid or credited to the provider would be exempt from additional tax, assuming commercial exploitation of the license wasn’t permitted, but would be subject to VAT as services provided by a nonresident making software available to a Chilean resident entity for use in Chile; 2) ...