Chile Tax Agency Clarifies VAT on Acquisition of Software from Nonresident Providers

The Chilean Internal Revenue Service March 25 issued Letter No. 778, clarifying the VAT treatment of software services provided by nonresident service providers to resident VAT taxpayers. A taxpayer purchased software from a company domiciled in the U.S. The taxpayer inquired as to its tax obligations on the transaction. The tax agency clarified that: 1) VAT applies to the purchase of software services provided by nonresidents and used in Chile; 2) nonresident service providers must register under the simplified regime for nonresidents; and 3) the resident VAT taxpayer must issue a purchase invoice, declare and pay VAT, and notify the ...