Fund association: Scrapping tax on foreign investors to boost financial hub

- Friday, September 23, 2011

Fund association: Scrapping tax on foreign investors to boost financial hub

The recently unveiled bill to scrap the tax on foreign investors who put money in funds where 80% of the assets are allocated outside of Chile is a major step toward turning the country into a regional financial platform, local fund manager association ACAFI president Fernando Tisné told BNamericas.

ACAFI has been pushing for years to end the 35% capital gains tax currently applied to overseas investors, as it says it creates an unfriendly regulatory environment.

"The regulations [in the bill] level the playing field with other Latin American and global markets, and will be key to attracting foreign investors en masse," Tisné said.

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The bill, announced September 21 by finance minister Felipe Larraín, also scraps the 19% VAT paid on administration commissions.

The bill will be sent to congress before month-end and is part of the fourth and current capital markets reform agenda, known as MKB.

Chile's fund management industry reported US$50bn in assets as of end-2010, equal to 23% of the country's GDP.

To read the finance ministry's full announcement, in Spanish, go to this link