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

Friday, September 23, 2011

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