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Interest – Rate Limitation: Generally, interest paid by a debtor resident in Chile to a creditor resident in the U.S. is subject to a 35% withholding tax in Chile. On the other hand, when the debtor is resident in the U.S. and the creditor resident in Chile, the general rate is 30%

• The DTA allows access to a withholding tax rate limitation of up to 15% for the first five years of validity, and then it would be 10% (starting from February 2029), incentivizing debt financing between both countries. There is also a preferential rate of 4% for some companies such as banks, insurance companies, financial institutions, or credit institutions that meet certain requirements.

Dividends – Rate Limitation: Dividends paid by a corporation resident in the U.S. to one resident in Chile may qualify for rate limitations of 5% or 15%, which is a significant benefit compared to the general rate of 30%.

• Regarding dividends paid from Chile to the U.S., the general rate of 35% is maintained, with the right to credit the First Category Tax previously paid on the profits from which the dividend is distributed (Chile Clause included in all our DTCs)

Capital Gains – Rate Limitation: Currently, when an entity resident in the U.S. earns capital gains derived from the sale of shares or rights in a Chilean company, it is subject to a withholding tax of 35% in Chile. The DTA would allow access to a rate limitation of 16% for this type of gains.

Royalties – Rate Limitation: The DTA also establishes limitations on the withholding applicable to payments for royalties (remuneration for the use or right to use intellectual or industrial property) by a resident of one country to a resident of the other. Thus, rates would be limited to 2% or 10%, depending on the type of right for which the royalty is paid.

Payment for Services (Business Profits) – No Withholding Applies: Payment for cross-border services could be subject to Income Tax only in the provider’s country of residence. Thus, for example, if a company resident in the U.S. provides services to a resident in Chile, it would not be subject to withholding tax in Chile and would only be subject to taxation in the U.S. (provided that the activity is not carried out through a permanent establishment).