Chile analyzes returning VAT on purchases to foreign tourists

At a time when we are experiencing the phenomenon of Argentines crossing to Chile for the convenience of buying certain products – clothing and technology, for example -, the government of that country decided to analyze the need to take several measures to boost tourismbetween them, return VAT in purchases from foreign tourists.

The Chilean government announced that it will present in Parliament in the coming days a bill to refund VAT to foreign tourists for purchases made in the country and that are for use or consumption outside, a measure that seeks to boost the ailing tourism sector.

“The project will enter the National Congress next week and will do so through the Chamber of Deputies, since it has tax measures,” said the Minister of Finance, Mario Marcel.

The legislative initiative emulates the VAT refund models to foreign tourists that exist in the European Union and in Latin American countries such as Uruguay, but in the case of Chile, the trade will not be required to be certified before the tax authority and tourists will only have to present the receipt of the product to be declared.

With this measure, more than 60% on average of expenses made by foreign tourists will be exempt from VAT because the other significant expenses, passenger transportation and lodging services, are already there, according to the Ministry of Finance.

The project also contemplates the refund of VAT to foreign audiovisual productions made in Chilean incentive similar to those carried out in countries like New Zealand to stimulate the audiovisual industry.

Chile, one of the countries that imposed the toughest and longest restrictions during the pandemic, received about 3.7 million foreign tourists in 2023, 17.4% less compared to 2019, before covid-19.

Pese a la decrease in foreign tourist arrivalsthe total foreign currency generated by tourism in 2023 exceeded $13 billion, higher than what was recorded before the pandemic.

“The pandemic the proportion between national and international tourism changed. We have 10% more national tourism, there are important behavioral changes in our compatriots, who decide to travel around the country on long weekends,” said the Undersecretary of Tourism, Vero Pardo.

The legislative initiative also includes double resources for international tourism promotion to 20 million dollars annuallyan amount that is “more than Argentina”, the great South American tourist beacon, pointed out Pardo.

To finance this increase, a 1.25% rate on the price of accommodation services contracted by foreign tourists, which also includes digital platforms such as Airbnb.