We invite you to read the letter to the editor written by our Tax group director, Andrea Bobadilla, on reestablishing DL 600 to promote foreign investment in Chile.
Mr. Director:
During these last days, a new debate has been installed related to reestablish the tax invariability, after what was raised by the mayor of Providencia and potential presidential candidate, Evelyn Matthei. It should be noted that DL 600, -created in the ’70s- to promote foreign investment, was repealed in 2016. In this regard, I believe it is necessary to clarify some relevant points.
International experience has shown that the greater the security, reliability and legal stability, the greater and more lasting the investment of foreign capital. Especially in the case of long-term high net worth projects, given that such projects, due to their size, go through several development stages that require more time to be fully executed.
This often involves that such projects go through more than one political government, reason for which, spaces to give certainty to the foreign investor of a stable tax regulation, constitutes a relevant and important incentive when making a decision on which country to invest in.
In the case of Chile, it is enough to look at the past to conclude, based on the empirical experience of DL 600, that such legislation has fostered stability and has been favorable for attracting foreign investors.
However, reestablishing DL 600 or legislating in that sense, especially considering the global scenario, would be a step forward.
Letter written by:
Andrea Bobadilla | Director Tax Group | abobadilla@az.cl
