2012 corporate and indriect tax rate
Mirroring the trends seen in past years, corporate and indirect tax rates around the world are in
constant flux as governments seek to hike indirect tax rates to raise revenue while cutting
corporate tax rates to attract investment. As companies struggle to keep up with new and
expanding corporate indirect tax regimes, they face rising pressures to manage aggressive tax
audits and disputes and new social imperatives to pay an appropriate amount of tax back to the
communities in which they operate. In this environment, international businesses need to have
appropriate strategies in place, including the right mix of income tax and VAT!"T management
resources, to stay ahead of these trends.
Trends in tax rate movement
"ince #anuary $%&$, the average global indirect tax rate increased by %.&' percent to &(.(%
percent and the average global corporate tax rate fell marginally by %.%) percent to $*.*+
percent. Indirect tax rates in the African and Asian regions saw the highest level of change, with
average rates moving up %.*% percent in both regions. ,urope-s average indirect tax rate also
climbed from &).'& percent to $% percent. Meanwhile, .atin America saw a slight average
indirect tax rate increase of %.%& percent to &$.') percent, while rates in /orth America 0(
percent1 and 2ceania 0&$.)$ percent1 remained unchanged. .ooking at corporate tax rates, all
regions experienced declines except Africa, whose average corporate tax rate increased by %.*'
percent to $).%$ percent. In /orth America, 3anada saw the largest decrease, with its corporate
tax rate dropping by & percent to ++ percent. .atin America followed close behind with a %.'$
percent drop in its average rate to $4.+ percent. ,urope-s average corporate income tax rate fell
by %.+4 percent to $%.( percent, Asia-s by %.$& percent to $$.4) percent, while the 2ceania
region remained unchanged at $4.5 percent.
Corporate income tax rates fall as complexity and risk rises
3orporate tax rates have been in a state of decline for more than a decade, and this trend will
continue in $%&+ 6 albeit at a slower pace. Many countries will use corporate tax and other tax
incentives to remain competitive and attract foreign investment. 3orporate tax rate cuts have
lowered in recent years, indicating that many countries believe they have achieved their targeted
rates and that steeper reductions would have only nominal effects on their competitiveness.
7urther, the global downturn has taken its toll on government finances, and tax authorities in
most developed countries are being pressed to raise more revenue from their tax bases with
fewer resources. To that end, even as corporate tax rates are falling, tax authorities are getting
more aggressive in tax audits and investigations, resulting in larger ad8ustments, more potential
for penalties and interest, and escalating tax controversy. In many markets, disputes have become
both more common and more acrimonious, leading to increased costs and greater uncertainty for
companies. In particular, six specific trends are emerging from tax authorities that are profoundly
affecting today-s tax environment9
&. :roadening of the tax base, for example by limitation of deductions and loss carry forward.
$. Increasing scrutiny in areas such as transfer pricing.
+. !reater collaboration with other 8urisdictions to identify and pursue tax evasion.
*. !rowing discomfort with aggressive corporate tax strategies.
(. ,xpansion and application of anti;abuse regulations, both domestic and international.
5. Increasing use of penalties as a source of revenue.
A further outcome of the financial crisis is a new focus on the link between taxation and
morality. As fiscally challenged governments impose austerity programs and attempt to boost
their tax revenues, the general public is growing more intolerant of companies and high net
worth individuals who are perceived as not paying their <fair share=. In many countries,
populations are now keenly aware of the importance of tax within their national economies, and
there is a growing sense that taxes must be shouldered collectively. In this environment,
managing reputational risk and proper communication has become a key responsibility of the tax
director. Tax directors will need to gain a clear understanding of their company-s risk appetite. To
build trust with their stakeholders and society at large, companies are likely to become more
transparent about the amounts of tax that they pay within each 8urisdiction on a fully
consolidated basis. 3ompanies have become more aware that it is important to understand and to
be able to communicate the <total tax contribution=, which goes beyond corporate income taxes
but also includes labor taxes, social security contributions and, in certain cases, even indirect
taxes and customs duties. At the same time, tax directors need to pay close attention to their
relationships with tax authorities around the world. >hen disputes do occur, tax directors should
take a direct role in reviewing their dispute responses before they are submitted.
Preparing for the challenges to come
>ith increasing complexity in corporate income taxes and international tax law, and tax
controversy and reputational
risk continuing to mount, companies will have to put more effort in keeping up with changes in
the multiple 8urisdictions in which they operate. Managing the effective tax rate and managing
financial risks will re?uire more expertise than ever.As the global shift toward indirect taxation
continues, companies will encounter more challenges in achieving full compliance and more
pressure on their resources and cash flow. 7orward;thinking companies are investing in tax
department transformation pro8ects to meet the challenges to come. 7or example, many
companies are opting to outsource income andor indirect tax activities. 7or many of them,
keeping up with rising compliance needs in;house can mean an ever;growing head count.
3ompanies are centrali@ing the management of their tax departments so they can maintain better
insight and oversight of the function across the entire organi@ation. >ork is also being done to
standardi@e and automate tax processes to ease the management of complex data flows,
streamline the performance of routine tasks, improve the accuracy of tax data and foster a better
understanding and communication of tax matters across the company.>ith an additional strategic
focus and investment in a company;wide framework for managing tax, it is possible to reali@e
opportunities to reduce the total business cost associated with compliance while improving
bottom lines. Those companies that get the balance right stand to reduce their risk, add more
value, and gain competitive advantage.
Corporate and Indirect Tax Rates 2012
Country Region Corporate tax
Indirect tax
Bangladesh Asia $'.( $$.4) &( &$.$*
Barados .atin America $( $4.+ &'.( &$.')
Belarus ,urope &4 $%.( $% $%
Belgium ,urope ++.)) $%.( $& $%
China Asia $( $$.4) &' &$.$*
Colomia .atin America ++ $4.+ &5 &$.')
India Asia +$.*( $$.4) &$.( &$.$*
!apan Asia +4.%& $$.4) ( &$.$*
Canada /orth
$5 ++ ( (
Chile .atin America &4.( $4.+ &) &$.')
1# Bangladesh
Corporate tax$
The corporate tax rate is $'.( percent. The corporate income tax rate is $'.( percent for
corporations 0except banks and other financial institutions1 listed at a stock exchange. If such
listed corporation pays a dividend that exceeds $% percent of the paid;up capital for a taxable
year, it receives a &% percent rebate on the tax payable. In cases where the dividend is lower than
&% percent of the paid;up capital, the corporate income tax rate is increased to +'.( percent.
"hould the dividend amount be less than &( percent in spite of having sufficient distributable
profits, the company is sub8ect to an additional ( percent tax on the undistributed profits. :anks,
insurance companies and other financial institutions are taxed at *$.( percent, and mobile phone
operators are taxed at *( percent. All other companies including branches of foreign companies
are taxed at +'.( percent. Aowever if a mobile phone operator company converts itself into a
publicly traded company by offering a minimum of &% percent of its shares on the stock
exchange through initial public offer, then applicable tax rate for such organi@ation will be +(
percent. A rebate in the amount of (% percent of the income derived from export business will be
granted to companies registered in :angladesh. Textile8ute industries are sub8ect to &( percent
but these industries will not ?ualify for an export rebate. Tax at %.* percent deducted by a bank
from export proceeds received by export;oriented knitwear and woven garment industries is
treated as final tax. If the profit earned by a bank exceeds (% percent of its capital and reserves,
the bank is sub8ect to a &( percent excess profits tax on the additional profit. The aforesaid rates
will remain valid for companies whose accounting year ends on any date up to +% #une $%&%.
Indirect tax$
The standard rate of VAT is &( percent. There are reduced rates of 5 percent, (.( percent, (.%%$(
percent, *.( percent, * percent, + percent, $.$( percent, &.( percent, and % percent which apply to,
for example certain categories of restaurants 0without A31, retailer of furniture 0Broduction
stage1 05 percent1C construction firm 0(.( percent1C air conditioned bus service, electricity
distributor, own branded readymade garments retailers 0(.%%$( percent1C motor garage, photo
producer, security services, legal advisers, carriers without petroleum, rent a car service,
immigration advisers, coaching centers, ,nglish medium schools, non;government medical and
engineering colleges, event management organi@ations, human resources supply and
maintenance organi@ations 0*.( percent1C supplies of goods and services through participation in
a tender?uotation 0* percent1C retailer of furniture without production stage, buyer of auction
goods 0+ percent1C pathological laboratory work, supplies of goods and services by hospitals and
maintenance and cleaning of building floorspremises, dental medical centers, petroleum carriers
0$.$( percent1C land development, construction of apartments, goldsmith or silversmith and gold
and silver retailer 0&.( percent1C VAT exemptions include9 for example certain food items 0such
as meat, fish, potatoes, vegetable, and fruits1C 8ute and 8ute goodsC social welfare, culture,
training, and rehabilitation servicesC and agricultural development.
2# Barados
Corporate tax$
The corporate tax rate is $( percent. The corporate income tax rate may be reduced, on a sliding
scale to &.'( percent, by a foreign currency tax credit granted for ?ualifying foreign currency
generating activities. "pecial rates apply for small business, manufacturing, or certain insurance
concessions. An international financial service center tax regime provides for exemption from
tax for certain insurance companies, a &.'( percent rate for ?ualifying insurance companies and a
variable rate of & percent to $.( percent for other ?ualifying international business activities.
Indirect tax$
The standard rate of VAT is &'.(% percent. There is a '.( percent rate which currently applies to
the provision of hotel and condo;hotel accommodations. Dero;rated supplies include exports of
goods and services, basic food items, printed matter, certain agricultural machinery, and
international transport of passengers and freight, as well as importations by approved educational
institutions and companies in the international financial services sector, among others. ,xempt
supplies include certain financial services, health and educational services, and specific supplies
of real property. 3ompanies in the international business sector are not re?uired to register for
VAT and any VAT which they suffer may be refunded on application to the VAT Eivision on the
prescribed form.
%# Belarus
Corporate tax$
The corporate tax rate is &4 percent 0effective & #an $%&$1. Feduced rates are &$ percent 0applied
for dividends1C &% percent 0for residents of science and technology parksC for sales of self;
produced high;tech goods1C (% percent of basic 3BT rate 0for disposal of sharesC for producers of
laser and optical e?uipment1C ( percent 0for registered members of "cience and Technology
Association established by the "tate Gniversity selling informational technologies and services1.
7or special economical @ones the 3BT rate may be reduced to (% percent of the standard tax rate
if certain special re?uirements are met.
Indirect tax$
The standard VAT rate is $% percent. Feduced rates are &% percent 0applied for clothes for
children and some social products, such as grain, milk, butter, fish, flesh and other products
included in a list approved by the president1, and %.( percent 0for diamonds and other precious
stones delivered from the Member "tates of the 3ustoms Gnion for production purposes1, and %
percent 0export1. "ome goods and services are exempt from VAT application, such as medical
e?uipment, medicines and other goods and services indicated in the Tax 3ode.
&# Belgium
Corporate tax$
The corporate tax rate in :elgium ++.)) percent. A lower 0progressive1 tax rate may apply to
companies that are more than (% percent owned by individuals. All companies sub8ect to resident
or non;resident corporate tax benefit from the risk capital or notional interest deduction that is
computed on the companies- ad8usted e?uity capital 0including retained earnings1. The deduction
e?uals + percent 0+.( percent for small companies1 for fiscal year $%&+ 0taxable years starting &
#anuary $%&$ or later1. The notional interest deduction reduces the effective tax rate to an
average range from $* percent to $' percent 0or lower depending on the e?uity capital1.
Indirect tax $
The standard rate of VAT 0taxe sur la valeur a8outHe9 TVA belasting over de toegevoegde
waarde9 :T>1 is $& percent. There are reduced rates of &$ percent, 5 percent and % percent. The
&$ percent rate applies to, for example social housing 0as from & #anuary $%%', 5 percent in
certain circumstances1, restaurant and catering services 0not drinks1, fytofarmacie, margarine.
Most food and drinks, books, pharmaceuticals, hotel and camping accommodations, passenger
transportation, refurbishment works to private dwellings 0under certain conditions1 and
agricultural services are charged at a 5 percent rate. /ewspapers and periodicals published
0under certain conditions1 are charged with % percent. "upplies of certain goods and services are
exempt from VAT, for example financial services, letting of immovable property, hospital
services, medical care and cultural activities.
'# China
Corporate tax$
The corporate tax rate is $( percent.
Indirect tax $
The standard rate of VAT is &' percent. There are three types of indirect taxes in 3hina9 value;
added tax, consumption tax, and business tax. There are reduced rates of &+ percent and %
percent which apply to, for example, basic necessities, agricultural products, utility services 0&+
percent1, and exports of goods 0% percent1. ,xports of various goods are not wholly @ero;rated
and all the associated input tax is not refundable in full to the exporters. The VAT rate for small;
scale VAT payers is + percent. 3ertain supplies of goods and services are exempt from VAT, for
example, agricultural products self;produced for the purpose of sale, ancient and anti?uated
books, and imported e?uipment for scientific research and experiment. :usiness tax rates are9 +
percent, ( percent, and a range of ( percent to $% percent. 7or example, services of
transportation, construction, post and telecommunication, cultural activities, and sports 0+
percent1, services of finance and insurance, hotels, restaurants, catering, tourist, rental, leasing,
advertising, the sale of intangible assets, transferring immovable property 0( percent1, and
entertainment 0( percent to $% percent1. There are &* categories of goods that are sub8ect to
consumption tax, including tobacco, li?uor, cosmetics, 8ewelers, firecrackers, refined oil, motor
vehicle tires, motorcycles, motor vehicles, golf balls and clubs, luxury watches, yachts,
disposable wooden chopsticks, and wooden floor panels. /ormally, consumption tax is charged
at an ad valorem 0value1 rate that ranges from & percent to (5 percent, while exports are @ero;
rated. "ome goods such as refined oil are levied at ?uantum 0unitvolume1 basis. As for tobacco
and some types of li?uor, compound rate calculations, at both an ad valorem and ?uantum rate
are applied.
(# Colomia
Corporate tax $
The corporate tax rate is ++ percent. /o surcharge is levied. 3olombian companies and foreign
branches ?ualifying as industrial users established in 3olombian 7ree Trade Dones are sub8ect to
a reduced corporate income tax rateof &( percent. In addition to the corporate income tax, there
is a municipal industry and commerce tax levied on industrial, commercial, and service activities
carried out within a municipality. The rate depends on the municipality and ranges between *.&*
and &+.4 per thousand. Eeductible expenses include industry and commerce tax, advertisement
tax and real state tax. 7urther, as of $%&+, (% percent of the financial transactions tax 0!M71
effectively paid is deductible for corporate income tax purposes 0currently $( percent1.
Indirect tax $
The standard rate of VAT 0impuesto sobre las ventas1 is &5 percent. The reduced rate of &.5
percent applies to certain cleaning and surveillance services, certain services rendered by the
cooperatives and pre;cooperatives of associated work, and to services rendered by temporary
services enterprises. The reduced rate of &% percent applies to coffee, cereals, chocolate, prepaid
health services, accommodation services in hotels, and commercial real property leasing, among
others. The increased rate of $% percent applies to mobile telephone services and certain motor
vehicles and ships. The increased rates $( percent and +( percent apply to certain motor vehicles
and motorcycles. Dero;rated supplies 0referred to as exempt supplies in 3olombia1 include
exports of goods, certain foods items, school notebooks, fuel alcohol destined to be mixed with
gasoline, books and maga@ines of a scientific and cultural nature, and services that are rendered
within the country and used exclusively abroad by enterprises or individuals without business or
activities in 3olombia 0exports of services1. ,xempt supplies 0referred to as non;taxable or
excluded supplies in 3olombia1 include basic food items, passenger public transportation to
some municipalities within 3olombia, cargo transportation, certain financial transactions, public
services of energy, water, sewer, public cleaning, garbage collection, and domestic gas, building
rental service used for residential purposes, certain agricultural servicesC certain life, health, and
education insurances and itemsC medicines, chemical and mineral fertili@ersC crude oil for its
refiningC natural gasC butanes and natural gasolineC woodC newspapersC certain arms of warC and
purchase of goods for human and animal consumption from specific neighboring states.
)# India
Corporate tax $
The corporate tax rate is +% percent for domestic companies. Brofits from life insurance business
in India are taxed at a rate of &$.( percent. 7oreign companies are taxed at a rate of *% percent. A
minimum alternate tax 0MAT1 is levied at &4.( percent of the ad8usted profits of companies
where the tax payable is less than &4.( percent of their book profits. Eividend distribution tax
0EET1 is levied at &( percent on dividends distributed by a domestic company. "urcharge and
education cess is applicable on the above taxes. A ( percent surcharge in case of domestic
companies and a $ percent surcharge in case of foreign companies is applicable if the total
income is in excess of I/F &% million. ,ducation cess of + percent is applicable on income tax
plus surcharge, if any. >ealth tax is imposed at a rate of & percent on the value of specified assets
held by the taxpayer in excess of the basic exemption of I/F + million. "ecurities transaction tax
0"TT1 is levied on the value of taxable securities transactions in e?uity shares and units of e?uity
oriented funds.
Indirect tax$
The standard rate of VAT is currently &$.( percent. India has a federal structure with both federal
and state;specific indirect tax. Intra;state sale of goods is sub8ect to VAT and sale of goods
occasioning movement across states is sub8ect to central sales tax 03"T1. In addition, there is
another indirect tax on supply of services, service tax. Brior to introduction of "tate;specific VAT
regime in April $%%(, the average state sales tax rate was &5 percent. Gntil March $%&%, around
&* to &' states have increased the basic slab rates of * percent 0up to ( percent1 and &$.( percent
0up to &( percent1. There are reduced rates of * percent, & percent, and % percent which apply to,
for example IT products, intangible goods 0such as patents and copyrights1, capital goods,
chemical fertili@ers, cotton, drugs and medicines, iron and steel, industrial inputs, sports goods,
tractors 0* percent1C gold, silver, precious stones 0for example diamonds1, articles or ornaments
made of the aforementioned 0& percent1C and exports of goods 0@ero rated1. There are increased
rates of $% percent and above, applicable to petroleum products 0such as diesel, petrol, lubricants,
and aviation turbine fuel1, natural and other gases used as fuel, li?uor and beer. 3ertain supplies
of goods are exempt from VAT, for example books, periodicals and 8ournals, electric energy,
milk, fresh plants, flowers, vegetables and fruits, meat, fish, prawn, rice, and wheat. 3"T is
charged at the rate of $ percent or alternatively at the VAT rate applicable in the originating state.
The standard rate of service tax with effect from & April $%&$ will be &$.+5 percent 0currently,
the same is &%.+ percent1. 3urrently, more than &%% notified categories of services are sub8ect to
"ervice tax, for example advertising services, financial and insurance services, business auxiliary
and support services, telecommunication, cargo handling, intellectual property services,
maintenance and repair services, certain IT services, management consultation, scientific and
technical consultancy, renting of immovable property service, information technology software
services, supply of tangible goods for use service, works contract services, etc. Aaving stated as
above, it may be noted that the !overnment, vide Gnion :udget $%&$, has proposed to
completely revamp the "ervice tax law through the introduction of negative list regime 0from a
date to be notified later1. :roadly, in a I/egative .ist- regime, all service transactions except &'
specified services would be liable to "ervice tax.
*# !apan
Corporate tax $
The corporate tax rate is +4.%& percent 0as of & April $%&$1. This rate will remain for the next
three fiscal years for a company 0beginning on or after & April $%&$1 and then reduce to +(.5*
percent. #apanese corporate income taxes consist of corporation tax 0national tax1, special local
corporate tax 0national tax1, business tax 0local tax1, and prefectural and municipal inhabitant
taxes 0local tax1. The corporation tax rate is $(.( percent except for small and medium;si@ed
companies and there is a &% percent surtax on the corporation tax payable for fiscal years
between & April $%&$ to +& March $%&( in order to increase tax revenue to finance recovery
from the March $%&& earth?uake. This gives a rate of $4.%( percent including surtax. .ocal tax
rates vary depending, for instance, on the local government and the amount of paid;in capital of
the company. The tax rate shown is the illustrative effective tax rate on income for a company in
Tokyo with paid;in capital of more than #BJ&%% million after taking into account a deduction for
special local corporate tax and business tax. "i@e;based business tax is also levied on a company
with paid;in capital of more than #BJ&%% million, in addition to the income;based business tax.
The si@e;based business tax rates in Tokyo are %.(%* percent on the added;value component tax
base 0total of labor costs, net interest payments, net rent payments, and incomeloss of the current
year1 and %.$& percent on the capital component tax base 0total paid;in capital and capital
Indirect tax $
The standard rate of consumption tax is ( percent. The rate will be raised to 4 percent on & April
$%&* and to &% percent on & 2ctober $%&(. There is a reduced rate of % percent, which applies to,
for example, sales or leasing of goods as export transactionsC sales or leasing of foreign cargoesC
international transportation servicesC and services provided to non;residents 0except for transport
or storage of assets in #apanC provision of accommodations and food in #apanC and provision of
services of a similar nature in #apan1. "upplies of certain goods and services are exempt from
consumption tax, for example, sale leasing of landC rental of housingC sales of securities, and
similar instrumentsC medical treatment under public medical insurance lawsC social welfare
activitiesC school tuitionC and examination services.
+# Canada
Corporate tax $
The corporate income tax rate is $5.+ percent. It comprises a &(.% percent federal tax component
and an &&.+ percent provincial tax component. Eepending on the province, the combined general
corporate income tax rate ranges from $( percent to +& percent. .ower corporate income tax
rates are available to 3anadian;controlled private corporations 033B3s1 on their first
3AEK(%%,%%% 03AEK*%%,%%% for certain provinces1 of taxable active business income. A $%&$
representative tax rate for a 33B3 on its first 3AEK(%%,%%% of active business income is &(.(
percent 0an && percent federal tax component and a *.( percent provincial tax component1.
Eepending on the province, the $%&$ combined active business income tax rate ranges from &&
percent to &) percent.
Indirect tax$
The standard rate of the federal !"T is ( percent. There is a reduced rate of % percent which
applies to @ero;rated supplies, for example exports of certain goods, prescription drugs, and basic
groceries. Also, certain goods and services are exempt from !"T, for example some supplies of
residential property, financial services, educational services, and health care services. In addition,
all provinces, except for Alberta, impose a value;added tax or a retail sales tax on the sales of
taxable goods and services. The provinces of 2ntario, :ritish 3olumbia, /ew :runswick, /ova
"cotia, and /ewfoundland and .abrador apply a harmoni@ed value;added tax known as the
harmoni@ed sales tax 0A"T1. The rates of the A"T vary from &$ percent to &( percent which
include a federal component of ( percent and a provincial component 0' percent to &% percent1.
There is a reduced rate of % percent which applies to @ero;rated supplies. The A"T applies to the
same base of goods and services as the !"T. The province of LuHbec applies its own value;
added tax, the LuHbec sales tax 0L"T1, at a rate of ).( percent or % percent to generally the same
base of goods and services as the !"T, except for financial services which are @ero;rated. The
L"T applies to the !"T;included price of taxable supplies made in LuHbec. The provinces of
"askatchewan, Manitoba, and Brince ,dward Island levy retail sales taxes in their respective
8urisdictions. The retail sales tax rates vary from ( percent to &% percent. :ritish 3olumbia
proposes to transition back to the ( percent !"T and a ' percent B"T effective & April $%&+.
Luebec proposes to harmoni@e the L"T to the !"T effective & #anuary $%&+ including making
financial services exempt from L"T. 7urther information to be released at a later date.

10# Chile
Corporate tax$
The corporate tax rate is &4.( percent. A return to a &' percent tax rate is scheduled to phase in
starting on & #anuary $%&+. Eividend tax rates on resident individuals and non;residents have
remained unchanged, and dividends paid out of $%&$ earnings will carry a &4.( percent
imputation credit respectively. 3hilean corporate income tax 0named first category tax1 applies to
all types of taxable income reali@ed by a taxpayer, individual, or legal entity, regardless of its
nationality, residence, or domicile, with the exception of income from dependent employee-s and
independent personal services. The tax base is the accrued net taxable income after allowable
deductions and expenses. 7irst category tax paid can be credited against final taxes, which are a
personal income tax with a progressive rate schedule in case of 3hilean resident individuals and
withholding tax with a +( percent flat rate in case of non;residents. ,ven though the 3hilean
corporate tax rate is currently &4.( percent and it is scheduled to return to &' percent as
mentioned before, government statements indicate that the corporate tax rate could be
maintained at $% percent 0the rate in effect for calendar year $%&&1. If this change is approved by
3ongress during $%&$, the $% percent rate may be applicable not only from $%&+ but also for the
entire calendar year $%&$. At this stage 0March, $%&$1 the 3hilean market is expecting some
amendments to the tax law, without knowledge and certainty about its extent.
Indirect tax $
The standard rate of VAT 0impuesto al valor agregadoC IVA1 is &) percent. .ocally registered
taxpayers can deduct Input VAT as a credit against output VAT. ,xports of goods are @ero;rated.
Aowever exporters can recover the input VAT in cash. ,xempt supplies include capital goods
imported by foreign investors or companies receiving foreign investment that have subscribed an
investment agreement with state of 3hile under Eecree .aw 5%%C international transportation of
cargo or peopleC certain types of insurance premiumsC payments for services provided by persons
who are neither domiciled non;resident in 3hile and who are sub8ect to income withholding taxC
interests on financial and credit transactions and instrumentsC services provided to persons
neither domiciled nor resident in 3hile and which are ?ualified as export services by the /ational
3ustoms "erviceC educational establishments and universities on educational activities, among
others. 3onsulting, advisory and professional services in general are not sub8ect to VAT.