MercoPress. South Atlantic News Agency

Chile considering bill to encourage repatriation of funds from abroad

It is estimated Chileans have anywhere from 20 to 35 billion US dollars overseas

The Chilean government’s interest in creating a law to encourage the repatriation of funds from abroad received approval by a number of tax experts this past week, reported local media. The proposal, which was first mentioned publicly, last week would allow money earned outside the country to enter Chile, but at a lower tax rate.

“It’s a good idea and it presents transversal benefits in Congress,” Juan Pablo Cabello, member of the law firm Cabello, Letonja y Cia, told La Tercera. “It’s a mechanism that allows the state to obtain an extraordinary amount of income, and the repatriated funds will generate better investments, dynamism in the economy, and profits that at the same time would be subject to tax.”

The rate at which these funds are taxed is considered to be critical to the laws success. If it is set at more than 5 or 6%, there would be little incentive.

It has also been emphasized that a method is needed to determine the origin of the funds, as well as measures to prevent money laundering.

Private sources estimated that as much as 20 billion to 35 billion US dollars could be repatriated. This would result in between 1.2 billion and 2 billion in taxes for the state of Chile.

A similar law was introduced by then-President Eduardo Frei Montalva after the earthquake in 1960 to collect funds.
 

By Alia Alhafny - Santiago Times