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Chile's Investment Guide“, Which Aims to Provide a First Look at the Chilean Market and the Necessary Considerations to Invest in This Country

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Chile's Investment Guide“, Which Aims to Provide a First Look at the Chilean Market and the Necessary Considerations to Invest in This Country Chile’s Investment Guide Welcome 3 1 The Chilean Economy 8 1.1 Introduction to the Chilean Economy 9 1.2 Geography and Overview of Chile 10 1.3 Economic Situation 11 1.4 Economic Records 13 1.5 Economic Sectors and Balance of Trade 17 1.6 Risk Ratings 20 1.7 Population figures 22 1.8 Chile's Performance in the Covid-19 Health Crisis 24 2 Chile’s Investment Scenario 30 2.1 Introduction to the Investment Scenario in Chile 31 2.2 Doing Business 32 2.3 Tax Regime 34 2.4 Labor Regime 39 2.5 Financial Reporting 45 3 Appendices 47 3.1 Investment Regulation and Promotion Agencies 48 3.2 Our services 51 EY Chile Contacts 55 Content 2 Macarena Navarrete Managing Partner, EY Chile Welcome Welcome to the "Chile's Investment Guide“, which aims to provide a first look at the Chilean market and the necessary considerations to invest in this country. Chile is one of the most attractive emerging markets and traditionally leads international assessments in Latin America. Two recent examples are the 2020 versions of the World Competitiveness Ranking by the International Institute for Management Development (IMD) in Switzerland and the Index of Economic Freedom by the Heritage Foundation in which the country is ranked the highest in the region. Also, it is the market with the best credit rating in the region, according to the main risk rating agencies, showing the confidence and strength of its economy. In addition, it has a well-known drive for global integration, holding free trade agreements with 64 markets, which represent 86.3% of the world's GDP. The country has been a pioneer in policies to attract investment, with clear systems and mechanisms. This approach implies support for foreign capital that other destinations are not able to offer. Admittedly, the international context is uncertain, and in addition to the ongoing pandemic, Chile has faced a complex situation derived from the social crisis that erupted in 2019. However, the country is carrying out profound changes in an orderly manner and within its democratic institutional framework. Consequently, the 2020 referendum, in which the drafting of a new Constitution was approved, and this year's elections, to define those who will have the task of writing the text, went off without a hitch, following the country’s tradition. With this guide, we want to contribute to the deepening of the relations between Chile and the world. We will provide key information regarding the main economic, tax, legal and labor aspects, among other information, that an investor needs to know when doing business or investing in the country. The changes in Chile and the international business scenario are increasingly accelerating, so we invite you to contact us if you would like a deeper view or update of the content that you will find in the following pages. Welcome to Chile. 3 Why EY? Our purpose is to build a better working world, creating long term value We provide global for our people, clients, knowledge and and society. experience tailored EY Global to your needs +298,000 people +150 countries +700 offices $37.2b revenue (USD) as of June 20, 2020 EY Chile EY Chile Offices Viña del Mar +1,500 Phone : +56 (32) 269 0707 Libertad 1405, Of. 2002 people Santiago +80 years Phone : +56 (22) 676 1000 in Chile Avda. Presidente Riesco 5435, Piso 4, Las Condes Concepción 4 Phone : +56 (41) 246 7000 offices Rengo 94, Of. 21 +2,500 Puerto Montt Phone: +56 (65) 228 5700 clients Concepción 120, Of. 906 4 Why EY? We are a trusted Assurance partner who can Tax Consulting help and guide you Strategy & in each stage and Transactions challenge of your Managed Services business Legal Business challenges Assure Grow In the current context it is vital to protect Driving growth for future success. your company against threats and maintain trust and credibility in the market. At EY, we help our clients identify new opportunities for their business and succeed At EY, we help you to build trust, protect and in the market. secure your business. Transform Operate The companies that adapt are the ones that The increasing volume and complexity of prevail. operational activities tend to distract leaders from driving their businesses forward. At EY, we help you plan and implement the changes your business requires to thrive and Delegating the operation and management of reach its full potential. services to EY allows our clients to lead from the strategy. How we help you solve this challenges Strategy | Consulting | Transactions | Assurance | Tax | Legal | Managed Services Technology 5 Why EY? We are leaders in Chile and the world Market share per (1) S&P IPSA: composed of EY audit client the largest and most liquid EY non-audit client companies on the Santiago Stock Exchange. Market services All other companies share is calculated based on company accounts with significant EY revenue in EY Chile fiscal year 2020. 1 2 3 (2) IGPA: groups the majority IPSA IGPA Ranking 500 of companies listed on the Santiago Stock Exchange. Market share is calculated based on company accounts 7% with significant EY revenue 23% in fiscal year 2020. 40% 38% 26% 38% (3) Ranking 500: composed of the 500 companies with highest revenue in Chile during year 2019. Market share is calculated based on company accounts with significant EY revenue in 53% fiscal years 2019 and 2020. 39% 36% (4) Fortune 500 and Forbes Global 2000: composed of America’s 500 largest companies and the world’s EY Global 2000 largest companies in revenue iduring 2019. 4 4 Market share is calculated Fortune 500 Forbes Global 2000 based on company accounts with at least US$500,000 in EY revenue during FY20. 16% 23% 27% 27% 61% 46% 6 Why EY? Our network of alliances brings value to your business The EY and Microsoft alliance EY and IBM combines EY's knowledge and collaborate to help experience in digital clients accelerate the technologies with Microsoft's use of transformation scalable enterprise cloud technologies. platform. EY and GE digital develop and EY and SAP help deliver innovative industrial IoT companies leverage (Internet of Things) services to industry-leading help companies complete their technologies to drive digital transformation. digital transformation. EY and Kinaxis help clients achieve supply chain excellence EY and LinkedIn are helping and modernize their capabilities organizations adapt to changes crosswise, through the in purchasing behavior through incorporation of technologies digital technology. such as augmented intelligence and machine learning. EY and Cisco help clients EY and Blue Yonder support increase operational efficiency, clients in transforming their collaboration, and asset supply chain and improving productivity to accelerate their the performance of their digital transformation. operations. EY and Blue Prism have EY and Adobe bring together combined their capabilities strategy, design, infrastructure of excellence to help unlock and knowledge to help business digital companies generate disruptive transformation through growth with differentiated intelligent automation. digital experiences. Learn more about how our global alliances can help your company: ey.com/alliances 7 The Chilean Economy 8 Introduction to the Chilean Economy This new edition of Chile's Investment Guide finds the country and Despite the downturn in economic figures, a strong upturn in the the world still facing an unprecedented health crisis. New waves of economy is expected in the second half of 2021. covid-19 have struck several countries deeply, having a major impact on societies and their economies. On the one hand, Chile is one of the world leaders in vaccination. According to the government, as of May, the immunization In Chile, this scenario is combined with a complex political and campaign against covid-19 has reached 69.2% of the target social background, which the country has been experiencing since population with one dose and 52.3% with two doses3. This will allow October 2019, when a period commonly called "Social Unrest" controlling the health situation and reducing mobility restrictions. began. A fare hike in Santiago's public transportation system gave rise to demonstrations and riots that began in that city but spread On the other hand, Chile is also beginning to see the effects of the throughout the country, with demands concerning social and improved situation of its trading partners, especially China, which economic inequality. has strongly boosted the price of copper in recent times. This movement has prompted the country to embark on a journey According to Oxford Economics, all of the above will influence GDP that will involve drafting a new constitution. In May 2021, Chileans to expand between 8.5% and 9.5%1 by 2021, with medium-term elected the 155 representatives of the Constituent Convention, growth averaging around 2.1%4. However, the pandemic situation who will be in charge of drafting the new text. This process will and the uncertainty due to the political and electoral processes culminate in an exit referendum in mid-2022, which will be held to cause the indicators to vary from day to day and hamper estimates approve or reject the proposed new constitutional text. of their evolution. In this context, the pandemic has hit the economy heavily, with the Despite the complex situation, Chile continues to lead the region in Gross Domestic Product falling by 5.8%1 in 2020 and unemployment terms of macroeconomic stability and financial resilience: the rising to 10.3%2. The effects were partially offset by one of the current account deficit has been contained, the net public debt is most robust goverment responses in the region, which included very moderate, the financial system is well regulated, and inflation cash transfers, tax deferrals and reductions, liquidity provisions expectations are well grounded, thanks to an independent and and collateral, and several withdrawals from pension funds.
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