The world is more connected than ever, and mining technology and service companies are no exception. As they expand their reach globally, they need to follow their clients to new markets, from a copper mine high in the Andes to the icey cold winters of Northern Canada. When exploring new markets, it’s the classic “chicken or egg” dilemma: You want to see success before committing to the expenses of a local operation, but as soon as you start generating revenue, the risk of being classified as a PE increases.
Subcontracting is used throughout the mining and industrial sectors. Chile has unique laws which have practical implications on how local companies need to manage their subcontracters. We have provided a practical guide for companies to understand how best to manage these risks.
Transfer pricing poses a significant risk to companies who are operating internationally since many countries are looking at these arrangements to ensure that profits are not being shifted to lower tax jurisdictions unfairly. It is important that companies understand how transfer pricing works in every country they are operating in.
Foreign companies operating in international markets need to be aware of how to manage the risk of corruption within their subsidiaries. This is particularly true in Latin America where operations can be far from the head office meaning local staff are often working with limited oversight.
Companies often overlook the importance of the dismissal letter. An improperly drafted dismissal letter will lack the legal grounds to ensure the cause of dismissal would be upheld if the matter were to go labor courts.
It is not always exciting to think about but how we grant powers and structure companies from a corporate governance perspective but it plays an important role in how we protect the foreign shareholder and ensure the local entity is operating to the highest standard.
Mining suppliers may use a local subcontractor for their installations at a mine site or to provide specialty services that are part of a larger contract but outside the suppliers’ core capabilities. The issue is that foreign companies can find themselves in trouble if they do not understand the risks that are particular to Chile and how to manage them when using subcontractors.
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