United States and Chile income tax treaty enters into force

Executive summary

On Dec. 19, 2023, the U.S. Department of Treasury announced the comprehensive bilateral tax treaty between the United States and Chile entered into force. This is the first new comprehensive bilateral tax treaty signed by the United States to enter into force in more than a decade.

The treaty will reduce, or eliminate, double taxation and promote cross-border trade efficiency between the countries.

Background

The US-Chile Income Tax Treaty (the Treaty), along with a Protocol, dates back to 2010 but had not received a Senate floor vote for over a decade due to concerns over language relating to the base erosion and anti-abuse tax (BEAT) and relief from double taxation. On June 22, 2023, the Senate voted in favor of consenting to ratify the Treaty with certain reservations and declarations to resolve such concerns. The Chilean Congress has since accepted such reservations.

The Treaty entered into force on Dec. 19, 2023.

Applicability date

The provisions of the Treaty will take effect as follows:

• For taxes withheld at source, the Treaty will have effect for amounts paid or credited on or after Feb. 1, 2024; and
• For all other taxes, the Treaty will have effect for taxable periods beginning on or after Jan. 1, 2024.

Taxpayers looking for additional information on the Treaty can read RSM's previous tax alert (United States and Chile income tax treaty moves forward).

The full text of the Treaty and other treaty documents can be found on the Treasury website.