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Custom Duties And Free Trade Agreements In Chile

Author:Mr Cody Mcfarlane
Profession:Harris Gomez Group

Imports into Chile are subject to custom duties at a general flat rate of 6%, however, the Free Trade Agreements (FTA) that Chile has signed during the last 20 years lower this taxation. In most cases, and after a few years of implementation, the FTA's often lower duty tax to zero.

To determine the exact amount of duty tax a product may be charged, the company must take into account the origin of the product and the FTA that may apply. In addition, considering that different products will be taxed differently, a careful look into each product must be done pursuant to the FTA's that they may be subject to.

Below you will find all the FTA's that Chile has signed:

(1) Mercosur: Argentina, Paraguay, Venezuela, Brazil and Uruguay. Chile participates as an associated country. (2) European Union: Germany, Austria, Belgium, Bulgary, Cyprus, Croatia, Denmark, Slovakia, Slovenia, Spain, Estonia, Finland, France, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, United Kingdom, Czech Republic, Rumania, Sweden. (3) EFTA: Iceland, Liechtenstein, Norway y Switzerland. (4) P4: Chile, New Zeland, Singapore y Brunei Darussalam. (5) Transpacific Partnership: Australia, Brunei Darussalam, Canada, Chile, United States, Malasia, Mexico, New Zeland, Peru, Singapore, Vietnam and Japan. (6) Pacific Alliance: Chile, Colombia, Mexico y Peru. To qualify for duty-free treatment under an FTA, an exporter has to certify that a certain percentage of the product to be exported was made in the exporting country. Rules of origin vary by FTA and by product.

With manufacturing supply chains getting increasingly spread out across countries, it gets harder and harder to figure out how much of a product was made in the exporting country and how much was made elsewhere.

There are two methods for determining domestic content - the build-up method and the build-down method, and they're both extremely complicated. It's easier to comply with rules of origin if your product is made entirely in your country using entirely domestic inputs. But those products are less common than they used to be, because supply chains have become increasingly international. Small companies might find it easier to comply with FTA rules of origin than big ones, because in some cases their inputs may be sourced entirely domestically.

Customs law is a complicated regulatory area in which companies are exposed to significant risk. Importers can often benefit...

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