Payroll compliance in Chile

Chile is known for its open market policies, zero tariffs, stable democratic government, solid business practices and low corruption rates. This makes the country a strong trading partner and export market, as well as an attractive destination for foreign workers and investment.

The main laws that govern and regulate payroll in Chile are the Chilean Labour Code, the Income Tax Law, Law No. 16,744 (covering work-related accidents or illnesses), and Law No. 20,255 (dealing with Social Security reform), among others.

• Payroll cycles in Chile can be set by days, weeks, monthly or on piece-rate terms. However, the unit of time cannot exceed one month. Common business practice is to have a monthly payroll cycle.
• According to Article 19 of the Chilean Labour Code, at least 85% of a company’s employees must be Chilean nationals (for companies with more than 25 employees).
• It is relatively straightforward for foreigners to obtain a work permit to live and work in Chile. There are only two kinds of work permit – ‘Visa subject to contract’ and ‘Working holiday visa’ – and generally they are organised and sponsored through the hiring company.
• In 2020, Chile modified its labour law by adding new provisions for remote working and flexibility of working methods.

If you’re doing business in Chile and are looking to learn more about Chile’s labour laws, incorporation procedures, tax implications and compliance requirements, request a copy of our full country profile, Doing business in Chile.

Payroll compliance guide

The global payroll compliance landscape can be a difficult one to navigate and interpret. Overseas businesses can be subject to greater scrutiny on the part of local governments, regulators and tax authorities.

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