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How and Why to Invest in Chile in 2024?

Chile • Feb 9, 2024 10:05:25 PM • Written by: Ongresso - Swiss Partner in Latin America

 

  • Chile's GDP is projected to grow by 22% in 2024 and 2.5% in 2025, exceeding regional averages. This stable growth trajectory signifies a resilient economy.
  • Public and private investments are expected to reach 22.5% of GDP in 2024, creating opportunities across various sectors, including infrastructure, energy, and technology.
  • Chile boasts over 20 free trade agreements, providing preferential access to major markets like the US, EU, and Asia, benefiting exporters and importers
  • Chile is a leader in renewable energy generation, driven by government incentives and abundant resources, presenting opportunities in solar, wind, and geothermal projects.
  • Santiago is emerging as a Latin American tech hub, attracting tech giants and offering a skilled workforce, making it a fertile ground for technology investments.
  •  Chile's corporate tax rate is 27%, one of the lowest in the region, offering an attractive tax environment for companies.
  • Chile has a well-developed infrastructure network, including modern ports, highways, and airports, facilitating efficient logistics and operations.


It should be noted that the WB (World Bank) provided data on FDI (Foreign Direct Investment) for the first 3 quarters of the year 2023 in Chile, which shows that the total accumulated flow reached US$14,495 million.

1. How to Invest in Chile? - Step-by-Step Guide

  • The first step to be able to invest in this South American country is that the natural or legal person must carry out the procedures before the SII (internal tax services).

  • Registration before the RUT (unique tax role) this document assigns a unique tax identification number, it is mandatory because it allows the investor to perform all economic and commercial activities.

  • Affidavit is a document where the individual or legal entity informs the SII (internal tax services) about the activities that may generate tax payments. 

    Once the sworn declaration of activities has been made, it is possible to request the stamping of documents, such as dispatch invoices, etc., which grant the right to tax credit for VAT (value added tax) and other taxes.

  • Certificate of residence this document is acquired through the neighborhood council or before a notary's office, this with the purpose of accrediting the domicile.Captura de pantalla 2024-02-07 a la(s) 9.42.10 p. m.

Source: SII (internal tax services)

2. How to Invest in Chile ? - 4 Alternatives

Like other Latin American countries, Chile has several ways in which not only foreign but also national investors can carry out their economic activities, among which the following stand out:

2.1.  MUTUAL FUNDS

These are the cash contributions of a group of individuals or companies that have similar objectives. In this case, they invest in a common fund and invest in financial instruments from different countries, sectors and in different currencies, thus composing a diversified portfolio of assets. 

Important: They may charge entry, exit and management fees.

2.2. ETFs

Exchange-Traded Funds (ETFs), also known as exchange-traded funds, are a type of investment that combines features of mutual funds and individual stocks. 

- An exchange-traded fund holds a basket of underlying assets (such as stocks, bonds, commodities) and trades like an individual stock.

- They offer instant diversification through a single investment.

- They are bought and sold during the day through brokers, just like stocks.

BETTER PERFORMANCE: 

- As of December 2023, there are 44 ETFs listed on the Santiago Stock Exchange.

- The largest ETF is the iShares S&P 500 ETF with assets of $1.2 billion.

- The best performing ETF year-to-date (YTD) is the Bci Global Gold Miners ETF with a 25.1% return.

- The ETF with the best 5-year performance is the iShares MSCI Chile All Cap Select ETF with a 38.2% return.

Captura de pantalla 2024-02-08 a la(s) 7.32.33 p. m.

Source: BLACKROCK

2.3. STOCKS

Shares are an investment instrument of capitalization and their profitability is variable; they represent a participation in the capital of a company. By purchasing shares, an investor becomes the owner of a part of the company and has the right to participate in its profits, such as dividends, and in its control, through the right to vote at shareholders' meetings.

Important: In Chile, the stock market is regulated by the Financial Market Commission (CMF). The country's main stock exchange is the Santiago Stock Exchange (BCS).

CHILEAN COMPANIES WITH THE HIGHEST PROFITABILITY

Captura de pantalla 2024-02-08 a la(s) 8.28.37 p. m.

Source: TRADINGVIEW

 

2.4.  REAL ESTATE INCOME FUND

These are forms of collective investment that invest in real estate assets with the objective of generating income through rent. This allows the investor to access this market without having to buy properties directly, which facilitates the investment and reduces the risk.

TYPES OF REAL ESTATE FUNDS 

- Real Estate Investment Funds: These are funds that are realized through the stock exchange and are regulated by the CMF (Financial Market Commission).

- Real estate private equity funds: These are aimed at institutional investors.

Captura de pantalla 2024-02-08 a la(s) 6.37.19 p. m.

CONCLUSION 

Taking into account the statistics and information provided, it can be evidenced that Chile offers an effective, efficient and favorable environment for investments. Its advantage lies in its economic stability, in its legal regulatory framework, in its developed financial market and it is worth mentioning that this South American country has the most competitive tax rate with respect to other Latin American countries. Taking as a reference the circular published by the SII (internal tax service) informs that the tax payment for companies in 2024 will be 12.5%.

If you want to know more about the Chilean financial market you can contact us now. Ongresso has qualified experts to help you invest according to your profile and we can also help you take that step so you can conquer new markets.

 



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