Chile Tax Agency Clarifies VAT on Use of Foreign-Owned Software

The Chilean Internal Revenue Service Oct. 16 issued Letter No. 2066, clarifying the application of VAT to uses of foreign-owned software. A taxpayer inquired as to the VAT treatment if an Australian company granted a temporary license for the use of software in Chile. The Tax Agency clarified that: 1) the services were exempt from additional tax under Income Tax Law (LIR), but subject to VAT under the Sales and Services Tax Law (LIVS); 2) a purchaser who was a VAT-payer in Chile would need to issue a purchase invoice declaring and paying the VAT directly to the tax authorities, ...