The US-Chile income tax treaty became effective on December 19, 2023. It allows MNEs to use mutual agreement procedures and advance pricing agreements to avoid double taxation. This treaty is an important step for tax certainty amid rising audit activities in Chile. It is the second bilateral tax treaty with a South American country for the US and the first in over a decade.
On December 19, 2023, the United States and Chile solidified their economic relationship by bringing the US-Chile income tax treaty into effect. This treaty enables multinational enterprises (MNEs) to utilize US-Chile mutual agreement procedures and bilateral advance pricing agreements. These provisions are crucial for preventing double taxation and establishing greater tax certainty for MNEs, especially in light of the heightened audit activities in Chile, which are anticipated to persist into the future. For the United States, this treaty represents a significant milestone, being the second comprehensive bilateral tax treaty in force with a South American country and the first new treaty of its kind signed by the US in over a decade.
The US-Chile treaty marks an important advancement in international tax relations. The growing complexity and frequency of audits in Chile have made tax certainty increasingly important for MNEs operating in the region. The provisions for mutual agreement procedures and advance pricing agreements are designed to facilitate collaborative resolution of tax disputes, thereby alleviating concerns regarding double taxation. This treaty not only enhances the business environment but also signals the United States’ ongoing commitment to fostering economic ties within South America.
In summary, the US-Chile income tax treaty, effective from December 19, 2023, is a significant development for multinational enterprises, providing mechanisms to mitigate double taxation and enhance tax certainty. The increased audit activity in Chile renders the treaty particularly beneficial, offering a safeguard for MNEs navigating the complex tax landscape. This treaty also reflects a broader strategy by the United States to deepen economic engagements with South American nations, marking a long-awaited enhancement in bilateral tax agreements.
Original Source: news.bloombergtax.com
