Incorporating a Local Company in Chile: A Practical Guide

For companies serious about servicing the Chilean market, incorporating a local entity is a crucial step. However, many foreign companies struggle with understanding the process, the required documentation, and the legal intricacies involved. Delays in setting up a local entity can create challenges such as difficulties in hiring employees, entering commercial contracts, or opening a bank account.

Why is Having a Local Company Important?

• Tax Obligations – If a foreign company has employees or operates in Chile for more than 183 days in a year, it becomes liable for local taxes. This requires maintaining full accounting records and obtaining a local tax number.
• Tax Efficiency – Chile has numerous double taxation agreements that allow foreign companies to optimize their tax obligations when repatriating funds.
• Commercial Credibility – Having a local entity simplifies business operations, allowing companies to enter contracts with local clients and suppliers more efficiently.

Common Concerns About Incorporating in Chile

Many companies hesitate to establish a local entity due to concerns over ongoing operational costs and managing the entity remotely.To address these challenges, Ax Legal offers a fixed-fee service covering all essential aspects of operating in Chile. Our goal is to make having a local presence in Chile as easy and cost-effective as possible—eliminating the need for back-office staff, a physical office, or complex administrative burdens.

• Company incorporation
• Bank account setup
• Legal and commercial address
• Employee onboarding
• Accounting, administrative, and back-office support

The Incorporation Process – Step by Step

While online resources outline the legal steps for incorporating in Chile, they often fail to explain the practical timeline and challenges companies encounter. Below is a detailed breakdown of the process:

Step 1 – Preparing Documents for the Foreign Shareholder

Before incorporation, the foreign company must obtain a tax number as a foreign investor. To do this, the following documents are required:

• Power of Attorney (POA) – Signed by a director, principal, proxy, or legal representative before a notary, then apostilled or legalized.
• Certificate of Good Standing – Issued in the home country, confirming the company’s legal existence and listing its shareholders.
• Certificate of Tax Residency – Granted by the tax office in the home country, apostilled, and not older than three months.
• Company Incorporation Deed or Bylaws – Certified by a notary and apostilled.

Step 2 – Obtaining a Tax Number for the Foreign Shareholder

1. Translate the required documents into Spanish (1–2 days).
2. Legalize documents at a Chilean public notary (2–3 days).
3. Submit documents to the Chilean tax office and obtain the foreign company’s tax number (1 day).
4. Total Time: 6 days

Step 3 – Incorporating the Local Entity

Once the foreign shareholder has a tax number, the company’s bylaws and legal formalities can be completed:

1. Draft and finalize the incorporation deed (1 day).
2. Sign and notarize the public deed to formally create the company (1–2 days).
3. Draft the company extract (1 day).
4. Register the company with the Commercial Registry (2–5 days).
5. Publish the company extract in the Official Gazette (1 day).
6. Finalize documentation at the notary (1–2 days).
7. Total Time: 7–12 days

Step 4 – Obtaining the Tax Number for the New Chilean Entity

The final step is securing a tax number for the newly incorporated entity. Companies must decide whether to initiate activities immediately (triggering tax filing obligations) or delay initiation (no on-going costs until operations begin).

1. File tax office forms and submit documentation (1–3 days).
2. Total Time: 1–3 days

Conclusion

For companies looking to establish a strong presence in Chile, having a legal entity is more than just a compliance requirement—it’s a strategic advantage. It ensures tax efficiency, enhances business credibility, simplifies hiring, and provides the legal framework needed to operate smoothly. With the right structure in place, companies can confidently navigate the Chilean market, build long-term relationships, and position themselves for sustainable growth.

At Ax Legal, we help companies navigate these decisions and streamline the entire process, ensuring a smooth market entry with minimal administrative burden.

Ax Legal helps industrial technology, engineering, and service companies to navigate the legal and commercial aspects of operating their business in Latin America. With deep knowledge of the industrial and natural resource sectors, we provide actionable and practical advice to help streamline our clients’ entries into Latin America, improve how they operate in the region, and to protect their interests.

Over the years, our team of legal and commercial advisors have developed a track record of working with companies of all sizes from Australia, Canada, the U.S., and Europe. The one common factor that connects our clients is that they are leaders in their field, providing innovative technologies and services to the industrial sectors.

To better understand how we can support you in the Region, please contact Cody Mcfarlane at cmm@ax.legal