VAT on Digital Services Chile:
Cross-Border Compliance

Since the 2020 Tax Modernization, Chile applies a 19% Value Added Tax (VAT) to digital services provided by foreign entities to Chilean residents. This regulation applies to a broad range of digital and remote services, including software, media streaming, advertising, and hosting, where the provider has no physical presence in the country. To support compliance, the Servicio de Impuestos Internos (SII) established a simplified taxation regime that allows foreign companies to declare and pay VAT without establishing a legal branch in Chile.

How VAT on digital services affects cross-border business in Chile

Key Implementation Dates

Main milestones behind Chile’s VAT on digital services framework and the filing options available to foreign providers.

01/06/2020

From June 1, 2020, Law 21.210 made VAT collection mandatory for foreign digital service providers supplying covered services to Chilean individuals and other recipients who are not VAT taxpayers.

Monthly / Quarterly

Unlike domestic taxpayers, foreign entities under the simplified taxation regime may choose to declare and pay the tax on a monthly or quarterly basis, using foreign currency such as US dollars (USD) or euros (EUR) instead of Chilean pesos (CLP).

Digital Services VAT Reporting in Chile: Overview

Implementation

Mandatory for foreign providers of digital services to Chilean consumers (B2C). It operates under a "Simplified Regime" (AVE) that allows registration and payment without establishing a local company or obtaining a full Chilean Tax ID

Tax Authority

Servicio de Impuestos Internos (SII)

Format

Tax is declared through Form 129. Foreign providers submit the declaration through the SII’s online process and may pay in USD or EUR. Standard foreign commercial invoices are accepted, and no Documentos Tributarios Electrónicos (DTE) need to be issued for these sales

Digital Signature

Not Required. Unlike domestic taxpayers who need a Digital Certificate, foreign providers in this simplified regime access the portal and sign their declarations using a Username and Password provided by the SII upon registration

Archiving

Six years. Providers should retain digital records of transactions, payments, and the logic used to determine customer location, such as IP address, card issuing country, or similar supporting evidence, in case of SII review

Other Chilean regulations

DTE (B2B E-Invoicing), Boleta Electrónica (B2C), Guía de Despacho (Logistics), RCV (VAT Reporting)

Need to ensure your SAP system meets Chilean VAT requirements for digital services?

Frequently asked questions

Which specific services are subject to this VAT in Chile?

The tax applies to a broad range of digital and remote services provided by foreign entities to Chilean consumers when the provider has no physical presence in the country. This includes digital entertainment content such as video streaming, music, gaming, and e-books, software and storage solutions including SaaS, PaaS, IaaS, and cloud hosting, digital advertising services, and digital intermediation through marketplaces or platforms.

Do I need to issue Chilean Electronic Invoices (DTE) if I register?

No. This is one of the main features of the simplified taxation regime. Foreign entities registered under this framework are exempt from the obligation to issue Chilean electronic tax documents such as DTE Type 33 or Type 39. They may continue using their own commercial invoices or receipts, and the SII only requires the tax declaration through Form 129.

Can I pay the VAT in US Dollars or Euros?

Yes. The SII allows foreign providers to declare and pay this tax in foreign currency. Providers may choose to pay in US dollars (USD) or euros (EUR), which avoids the need to open a Chilean peso bank account or manage exchange-rate complexity locally.

Is there a minimum sales threshold to register?

No. Chile does not apply a de minimis threshold for this regime. In practice, foreign providers become liable to register and collect the 19% VAT from the first covered sale made to a Chilean B2C customer.

Is this tax compatible with Double Taxation Treaties?

Generally, Double Taxation Treaties (DTTs) apply to income tax rather than Value Added Tax (VAT), which is a consumption tax. As a result, Chile’s 19% VAT on digital services is usually payable regardless of existing treaties. If the service also falls under a different tax treatment, such as Impuesto Adicional, a separate analysis may be needed.

Can the calculation and reporting of this VAT be automated in SAP?

Yes. While filing through Form 129 is done through the SII portal, the determination of whether Chilean VAT applies can be automated in SAP or other enterprise resource planning (ERP) systems. By using a tax determination engine, companies can validate customer location using data such as IP address, payment method, or billing address and calculate the VAT liability more consistently.

Code10’s Methodology for SAP Integration and Digital Tax Compliance

The introduction of mandatory VAT on Digital Services in Chile represents a significant shift for foreign service providers operating in the country. Businesses are required to comply with the tax reporting and payment standards set by the SII, and their ERP systems must be capable of calculating, reporting and remitting VAT on cross-border transactions in a safe and automated way.

At Code10, we support the digital modernisation of companies with the implementation of SAP Document Reporting Compliance (DRC) and the support of our eCompliance Hub. We use SAP functionalities and develop non-standard enhancements whenever needed – guaranteeing compliance with the local regulations.

Contact Code10

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VAT on Digital Services Chile:Cross-Border Compliance