Tax Treaty Between Norway And Chile Welcomed

by Ulrika Lomas, Tax-News.com, Brussels

21 November 2001

According to a leading South American tax expert, the recent tax treaty signed between Norway and Chile will significantly boost foreign investment for both countries, and has been widely welcomed by the business sector.

The treaty, which was signed in Santiago in late October by the National Treasury Minister of Chile, Nicolas Eyzaguirre, and the Norwegian Ambassador to the country, Mona E. Brother, has not yet come into force as some of the formalities remain incomplete.

However, according to Miguel Massone of PricewaterhouseCoopers in Santiago, the benefits- once the process is complete- will be significant. 'The treaty will reduce the withholding taxes on certain items of income which are very important for foreign investors, such as interest and royalties,' Mr Massone told the Norwegian press earlier this week.

One of the most important aspects of the treaty, according to PricewaterhouseCoopers, is the 'permanent establishment' provision whereby, for example, fees for technical assistance provided by a Norwegian company to a Chilean organisation would not be taxable in Chile unless the Norwegian company has a permanent establishment there.

Other provisions include the limitation of withholding tax on interest remitted from Chile to Norway to a rate of 15%, and the reduction of taxes on royalties from patents and trademarks.

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