Chile considers new 19 percent tax on multinational e-commerce firms

Chile considers new 19 percent tax on multinational e-commerce firms

Reuters  | Jan 10, 2019 04:03PM ET

Chile considers new 19 percent tax on multinational e-commerce firms

By Marion Giraldo

(Reuters) - Chile is weighing proposals for a new tax of up to 19 percent on multinational digital commerce companies with local operations Finance Minister Felipe Larrain said on Thursday, a rate nearly double that originally proposed.

The Chilean Chamber of Commerce, the Confederation of Production and Commerce and the Organisation for Economic Co-operation and Development (OECD) are backing a 19 percent rate, which would match the value-added tax (VAT) currently paid by Chilean companies.

The measure targets international companies such as Amazon (O:AMZN), Netflix (O:NFLX), Spotify (N:SPOT), and Uber (UBER.UL), which are based outside Chile but are increasingly offering their services domestically.

Chilean President Sebastian Pinera's center-right government has floated a rate of 10 percent on such companies, part of a broader tax overhaul currently before Chile's Congress.

Larrain confirmed the OECD had suggested a rate of 19 percent, and that the government was evaluating it and other proposals.

"We are going to discuss with members of the (congressional) Finance Committee and we are open to dialogue," Larrain told reporters, adding that the government had yet to make a decision.

Pinera's government has said Chile is benefiting significantly from the rollout of the digital economy, but that it was only fair that multinational companies operating in the Andean nation contribute to the country's development.

The proposed tax has caught the eye of Amazon, which has twice met with Chilean officials working on the legislation to express the company's concerns.

© Reuters. FILE PHOTO: Amazon boxes are seen stacked for delivery in the Manhattan borough of New York City

E-commerce is fast gaining traction in Latin America after a slow start. Amazon Web Services, a subsidiary of Amazon, has discussed potential investment in the country with Pinera, part of a longer-term regional expansion plan.

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