Montt y Cia SA
Our organization was born in 1974 as a law firm founded by Santiago Montt Vicuña, Esq. to date its President and C.E.O. whom along with other professionals, created a firm with the aim to support the then emerging Chilean export industry, in both the goods and services sectors.Show more
Congress recently approved a bill to replace the Superintendence of Securities and Insurance, the securities and insurance watchdog, with the newly created Financial Markets Commission. The commission will have the same authority in the financial and insurance markets as its predecessor, as well as improved powers, particularly regarding investigations and the application of penalties.
Company & Commercial
Law 20,954, which amends the Corporations Act in Law 18,046, was recently published in the Official Gazette. The amendment provides that custodians of shares in public companies that hold shares on behalf of other parties must provide the Securities and Insurance Commission with the identity of those parties. Banks that act as custodians must report this information to the Superintendence of Banks and Financial Institutions.
A taxpayer recently requested a ruling from the Tax Department on the treatment of gains from cryptocurrency transactions for income and value added tax purposes, as cryptocurrencies are not specifically regulated in Chile or recognised as legal tender or foreign currency. The department's analysis reflected the broad definition of 'income' in the Income Tax Act and the fact that there is no specific exemption or favourable treatment given to these specific gains.
A business group recently requested an advance ruling from the Internal Revenue Service regarding the merger of a Chilean subsidiary with a company resident in a low-tax jurisdiction. The service stated that pursuant to Article 64 of the Tax Code, it will not exercise its assessment authority where it has been effectively proven that the legal effects of a merger in another country will be carried out in accordance with Chilean legislation and that the operation will be carried out under the terms of tax neutrality.
The Tax Department recently issued Circular 57, which provides a definition of a 'permanent establishment' for domestic law purposes and underlines that such fixed places of business require a tax registration number. Although the circular has been issued with a limited scope, it may have additional benefits, including identifying whether a foreign entity or individual has a permanent establishment operating in Chile.
The Supreme Court recently revoked two appeal court decisions in which the underlying issue was the Tax Department's authority to deny taxpayers the ability to issue invoices in certain circumstances. It is unclear whether the Tax Department will review its criteria in this regard, as court decisions in Chile affect only the parties in the specific case.
A taxpayer resident in Chile with a portfolio investment in the United States recently requested a ruling on whether he was entitled to a refund of certain withholding taxes paid by the portfolio because it included bonds issued in Chile. The taxpayer argued that withholding tax should be refunded to the beneficiary of the interest if the beneficiary is a Chilean resident. However, the Tax Department took a different view.
A taxpayer recently requested a ruling on whether a certain type of tax treatment was available following the merger and consolidation of a group. The tax department ruled that the individuals who owned shares in the resultant entity were entitled to use a variable tax rate rather than the 32% fixed tax rate on corporate income tax already paid on profits, as there is no transfer of property in a merger process, but rather an assignment of property to a person who already has a legal interest therein.
Ruling under Chile-UK double tax treaty on permanent establishment and entitlement to treaty benefitsChile | 07 April 2017
A taxpayer recently requested a ruling from the Chilean tax authorities on whether a branch of an entity resident in a third state should be considered a UK resident for the purpose of claiming the benefits provided under the Chile-UK double tax treaty. The tax department concluded that the person claiming benefits under the treaty was a resident of a third state and that its UK branch or permanent establishment did not meet the requirements to qualify as a UK resident under the treaty.
The recent tax reform introduced by Law 20,780 has provided for two alternative tax regimes: the attributed regime and the partially integrated regime. The attributed regime applies to individual entrepreneurs, limited liability companies, communities and joint stock companies, while the partially integrated regime is obligatory for corporations and companies whose members and shareholders are other companies (resident or non-resident).
Employment & Benefits
The Labour Reform Law 20,940, which was introduced in April 2017, focuses on reforming union rights. A centrepiece of the reform is the removal of an employer's right to replace personnel who go on strike with other workers. This amendment means that Chile is one of the only countries within the Organisation for Economic Cooperation and Development to remove this rule.
Labour Reform Law 20,940 primarily concerns collective bargaining and the power of unions. A key issue introduced by the law was the elimination of employers' right to hire replacement workers during labour strikes. This restriction will have a paralysing effect on companies, as unions have seen their negotiating position strengthened. Further, there is no clear penalty for illegal strikes. These changes could damage the culture of dialogue in the context of industrial disputes.
In Chile, diversity in the workplace is directly related to the principle of non-discrimination and the acceptance of employees regardless of their gender, age, social status or political beliefs. Diversity in the workplace is mainly governed by the Constitution, the Labour Code and complementary laws. Chile is also moving towards the adoption of international standards on non-discrimination.
Energy & Natural Resources
The relationship between surface landowners and mining concession holders in Chile is governed by law, which grants preferential rights to the latter. Mining concession holders may exercise their rights to search for minerals and impose mining easements on landowners. However, in the case of state property, such matters are regulated by a ministerial order.
Until 1979, the Mining Code 1932 defined the legal regime for lithium. During that period, lithium was treated like any other mineral and could be privately owned without special restrictions. This situation has changed with the enactment of a number of laws. Most recently, the Ministry of Mining's Supreme Decree 64 established special operation contract requirements and conditions for the exploration, exploitation and processing of lithium deposits in the Atacama region.
The El Pelicano solar park, a photovoltaic power plant located north of Santiago, was recently opened. The plant, which represents an investment of $250 million, has a capacity of 110 megawatts (MW) and will provide approximately 42% of the energy required by the Santiago subway system. In 2014 solar power in Chile had an installed capacity of 11 MW. With the launch of the El Pelicano project, this capacity has risen to 2,100 MW.
Environment & Climate Change
The government recently filed a compensation claim for environmental damage against mining company Pampa Camarones. The claim was based on the fact that Pampa Camarones' operations had violated a series of measures that the regional evaluation commission had stipulated to protect a nearby archaeological site. As a result, over 15 hectares of the site were destroyed without the required measures being undertaken to protect its archaeological value.
The Superintendence of the Environment (SoE) recently issued an environmental resolution ordering the permanent cessation of Compañía Minera Nevada (CMN) SpA's Pascua Lama mining project. After having considered the background and evidence provided during the investigative process, the SoE ordered the permanent closure of the mining site based on a number of breaches and imposed a series of fines. CMN SpA has filed a complaint against the resolution.
A recent Supreme Court of Justice decision required the applicant in a proceeding initiated to complete the good and legal title of surface water rights to notify all holders of water rights in the same watershed to which the application referred. Failure to involve other rights holders in the same river basin in the respective proceedings, as required by this decision, could render subsequent proceedings obsolete and thus result in the loss of considerable time for the applicant.
Congress recently approved a tax reform that introduced a new Pigovian or green tax and amended income and indirect tax rates. The green tax will apply directly to emissions derived from industrial processes that result in environmental damage. The new tax will be implemented before the end of 2017 and will affect industrial establishments that use boilers or turbines.
The securities and insurance regulator (SVS) recently published for comment the fifth version of its methodology for determining the risk-based capital of insurers. The latest version ‒ as well as the conceptual bases developed by the SVS for analysis, discussion and improvement ‒ includes a number of changes from the previous version and will be subject to public consultation until July 31 2017.
In 2015 the National Institute of Industrial Property (INAPI) was designated as an international searching authority (ISA) and international preliminary examining authority (IPEA) under the Patent Cooperation Treaty. From January 1 2018, the INAPI can issue international search and preliminary examination reports for Chilean applicants and applicants from Latin American and Caribbean countries that have designated the INAPI as their ISA and IPEA.
The National Institute of Industrial Property (INAPI) recently inaugurated its technology and innovation support centre, which was backed by the World Intellectual Property Organisation. The INAPI also recently implemented an advanced electronic signature programme, strengthened security measures to safeguard information and initiated a pilot plan that will enable the institute to become a paperless organisation.
Law 21,045, which was recently published in the Official Gazette, created the Ministry of Culture, Arts and Patrimony and reformed the IP Act through the creation of the National Cultural Patrimony Service. Under the changes introduced, the Intellectual Rights Department is now under the auspices of the National Cultural Patrimony Service. As a result, all IP matters are now part of the new Ministry of Arts, Cultures and Patrimony.
Trademark Office rejects trademark applications for differences between applied trademark and applicantChile | 31 July 2017
The Trademark Office recently rejected several trademark applications containing the terms 'corporation', 'corporations' or similar when the applicant was not a US-based company on the basis that they would result in error or confusion. However, the Industrial Property Appeals Court dismissed this argument and revoked the Trademark Office's decisions, stating that the law does not require a trademark to be concordant with the applicant's corporate structure or organisation.
After more than eight years of litigation, the Pablo Neruda Foundation (heir to the rights of the Nobel Prize-winning Chilean poet Pablo Neruda) obtained a favourable decision from the Industrial Property Appeals Court regarding its annulment action against the Reyes hereditary succession. This decision is not only relevant as an example of the application of IP Law and the Succession Law, but also refers to one of Chile's most famous names.
The National Institute of Industrial Property (INAPI) recently announced that, as of January 4 2017, it will apply the 11th edition of the Nice Classification for Goods and Services to all new trademark applications. By adopting the 11th edition of the Nice Classification, INAPI now maintains the same standards as the World Intellectual Property Organisation, thus providing improved international protection for trademarks.