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The Chilean Tax Authority issued Resolution N°151/2020 on December 9, 2020 (the “Resolution”) which addresses formal requirements applicable to tax residency certificates required to claim: (i) a full ‘first category tax credit’ against withholding taxes imposed on dividend distributions to foreign shareholders resident in a treaty jurisdiction, or (ii) a reduced rate or exemption for other types of income under the relevant treaty. In the Resolution the Chilean Tax Authority also went beyond formal requirements and analyzed the specific situation of dividends paid to foreign shareholders deemed to be flow through under foreign law.

New regulations relating to tax residency certificates should be observed prior to making any payment abroad, especially for dividends that would claim a full first category tax credit.

In addition, foreign entities and individuals holding Chilean investments through flow through entities should evaluate whether the treatment applied to dividends paid in the past or to be paid in the future to such flow through entities are consistent with the Resolution.