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Working in Chile
Find out how to get a job and work in Chile
As one of Latin America’s strongest economies, Chile has lots of opportunities for foreign investors and expats. Read our guide to find out all about working in Chile, from how to go about the job search to business etiquette and taxation.
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Employment in Chile
At a Glance:
- Helped by multiple trade agreements with countries around the globe, Chile has one of South America’s strongest economies.
- As a foreigner, securing employment in Chile can often be difficult due to the complex visa and work contract requirements. Persist though, life in Chile is definitely worth the wait!
- A good understanding of Spanish is invaluable in the Chilean workplace and one that will definitely help you to gain the respect of your Chilean colleagues.
- Expats living in Chile, who are considered residents and have a domicile in the country, have to pay income tax on their entire income, whether it be from Chilean or foreign sources.
Chile: Eager to Trade
Chile is considered one of South America’s most economically successful and stable nations, with its economy being largely dominated by foreign trade. It has a reputation for strong financial institutions; in fact, Chile has the strongest sovereign credit rating in South America, making it an attractive location for investors.
Reforms undertaken in the early 1990s strengthened the country’s economic position, leading to a decade of impressive economic growth. More recently, however, economic growth has slowed, with the first two quarters of 2017 seeing meager growth levels, projected to reach 2% by the end of the year.
Chile prides itself on being the country with the most bilateral or regional trade agreements in the entire world. Currently, there are 25 such agreements between Chile and 65 different countries, including China, India, South Korea, Mexico, the US, and the EU. In 2010, Chile became the first South American country to join the OECD.
Looking for a Job? Phone a Friend
One of the best ways of finding a job is through pitutos, your connections to Chile’s business world. This is a common concept in a country where personal relationships are incredibly important. Even if you don’t know anybody yet, finding work in Chile is not impossible. Take a look at the job section of the Sunday edition of El Mercurio to get started.
However, even if you find a few job ads which sound exciting, you shouldn’t underestimate the persistence it takes to work in Chile. Many companies are hesitant to hire anybody who doesn’t have a valid work visa. However, you need a work contract to apply for a work visa in the first place, meaning the whole process can often be infuriating. Large, international companies may be your best bet: they often have their own lawyers and are familiar with the work permit application process for prospective employees.
At the Office: Slow and Steady Wins the Race
Expats who are looking to work in Chile should be aware that the country’s labor force works the sixth highest number of average annual hours of all OECD countries. In 2016, OECD revealed the average number of hours worked was 43 hours per week.
However, when it comes to answering emails or returning phone calls, people in Chile are often not the quickest to respond. Messages are often not acknowledged and your business partners may not get back to you unless there is a definitive reason to do so. Things move a little slower in Chile and you should make sure to check in with your business partners every now and then, to make sure everything is getting done on time.
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Chile’s Business Environment
Speaking Spanish in the Workplace
Many Chilean business people have at least a basic command of English, particularly in bigger international companies. However, managers and employees of medium-sized and small companies often don’t speak English at all, making learning Spanish essential prior to your move. It will also significantly improve your relationship with your business partners.
Hierarchies and honor play an important role in Chile’s business world. Make sure to never voice your criticism openly or embarrass anyone in public. It is important to always address your business partners with their last name and their title. Always use the formal “Usted” (you), especially when speaking to those in management positions.
Taxation in Chile
Expats in Chile, who are considered residents and have a domicile in the country, have to pay income tax. This is the case whether they receive their paycheck from domestic or foreign sources.
Non-residents, on the other hand, are only taxed on their Chilean income. This is also the case when you receive income from a company or a business deal undertaken in Chile. During the first three years of living in Chile, expats are only taxed on their Chilean income. This period can be extended in some cases.
In general, Chilean income tax follows three basic principles:
- Income taxes are paid by individuals or on behalf of individuals by the company they work for.
- Taxes are based on all income received or accrued by a company during a tax period.
- Business owners are only taxed on profits withdrawn from their company.
The local tax, which is placed on goods and services, is currently 19%. You may be subject to additional taxes while working in Chile. Contact the Chilean tax authorities for more information. Make sure to also talk to tax authorities in your home country to figure out if you can benefit from any double taxation agreements.
A Pioneer in the Field of Social Security
Following pressure from different workers’ organizations, Chile was one of the first countries in the Americas to implement a state-sponsored social security system. Reforms led to the creation of 35 different pension funds and about 150 social security schemes in the early 1970s. Eventually, the system was privatized, while further reforms took place in 2008. Mandatory contributions are equal to 10% of your monthly income. In general, your pension is not allowed to fall below 70% of your last month’s salary.
You are free to choose your pension-fund company. The age of retirement in Chile is 65 for men and 60 for women. As of 2012, pension law dictates that to be able to retire early, the balance built up must be equal to 70% of your average real wage over the preceding ten years and comprise at least 80% of the maximum welfare pension (PMAS). Because the change from the old to the new system was voluntary, many Chilean retirees are still part of the state-run social security system, called the Institute of Pension Fund Normalization (Instituto de Normalización Previsional — INP).
Currently Chileans are looking for further reforms to the pension system. Many workers struggle to be able to afford save enough for their retirement, resulting in lower pensions than in many other developed countries.
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