Doing Business 2020 Chile Economy Profile Chile Page 1 Doing Business 2020 Chile Economy Profile of Chile Doing Business 2020 Indicators (in order of appearance in the document) Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company Dealing with construction permits Procedures, time and cost to complete all formalities to build a warehouse and the quality control and safety mechanisms in the construction permitting system Getting electricity Procedures, time and cost to get connected to the electrical grid, and the reliability of the electricity supply and the transparency of tariffs Registering property Procedures, time and cost to transfer a property and the quality of the land administration system Getting credit Movable collateral laws and credit information systems Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance Paying taxes Payments, time, total tax and contribution rate for a firm to comply with all tax regulations as well as postfiling processes Trading across borders Time and cost to export the product of comparative advantage and import auto parts Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for insolvency Employing workers Flexibility in employment regulation and redundancy cost Page 2 Doing Business 2020 Chile About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of employing workers. Although Doing Business does not present rankings of economies on the employing workers indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more efficient regulation; offers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business offers detailed subnational studies, which exhaustively cover business regulation and reform in different cities and regions within a nation. These studies provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The first Doing Business study, published in 2003, covered 5 indicator sets and 133 economies. This year’s study covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has benefited from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. To learn more about Doing Business please visit doingbusiness.org Page 3 Doing Business 2020 Chile Ease of Doing Business in DB RANK DB SCORE Region OECD high income Chile Income Category High income 59 Population 18,729,160 72.6 City Covered Santiago Rankings on Doing Business topics - Chile 41 39 51 54 53 57 63 73 86 94 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Topic Scores 91.4 75.9 85.7 71.1 55.0 66.0 75.3 80.6 64.7 60.1 Starting a Business (rank) 57 Getting Credit (rank) 94 Trading across Borders (rank) 73 Score of starting a business (0-100) 91.4 Score of getting credit (0-100) 55.0 Score of trading across borders (0-100) 80.6 Procedures (number) 6 Strength of legal rights index (0-12) 4 Time to export Time (days) 4 Depth of credit information index (0-8) 7 Documentary compliance (hours) 24 Cost (number) 2.7 Credit registry coverage (% of adults) 59.1 Border compliance (hours) 60 Paid-in min. capital (% of income per capita) 0.0 Credit bureau coverage (% of adults) 44.0 Cost to export Documentary compliance (USD) 50 Dealing with Construction Permits (rank) 41 Protecting Minority Investors (rank) 51 Border compliance (USD) 290 Score of dealing with construction permits (0-100) 75.9 Score of protecting minority investors (0-100) 66.0 Time to export Procedures (number) 12 Extent of disclosure index (0-10) 8.0 Documentary compliance (hours) 36 Time (days) 195 Extent of director liability index (0-10) 6.0 Border compliance (hours) 54 Cost (% of warehouse value) 1.2 Ease of shareholder suits index (0-10) 7.0 Cost to export Building quality control index (0-15) 13.0 Extent of shareholder rights index (0-6) 6.0 Documentary compliance (USD) 50 Extent of ownership and control index (0-7) 4.0 Border compliance (USD) 290 Getting Electricity (rank) 39 Extent of corporate transparency index (0-7) 2.0 Score of getting electricity (0-100) 85.7 Enforcing Contracts (rank) 54 Procedures (number) 5 Paying Taxes (rank) 86 Score of enforcing contracts (0-100) 64.7 Time (days) 43 Score of paying taxes (0-100) 75.3 Time (days) 519 Cost (% of income per capita) 49.3 Payments (number per year) 7 Cost (% of claim value) 25.6 Reliability of supply and transparency of tariff index (0-8) 7 Time (hours per year) 296 Quality of judicial processes index (0-18) 10.0 Total tax and contribution rate (% of profit) 34.0 Registering Property (rank) 63 Postfiling index (0-100) 57.0 Resolving Insolvency (rank) 53 Score of registering property (0-100) 71.1 Score of resolving insolvency (0-100) 60.1 Procedures (number) 6 Recovery rate (cents on the dollar) 41.9 Time (days) 28.5 Time (years) 2.0 Cost (% of property value) 1.1 Cost (% of estate) 14.5 Quality of the land administration index (0-30) 14.0 Outcome (0 as piecemeal sale and 1 as going 0 concern) Strength of insolvency framework index (0-16) 12.0 Page 4 Doing Business 2020 Chile Starting a Business This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and formally operate in each economy’s largest business city. To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally start and formally operate a company To make the data comparable across economies, several assumptions about the business and the (number) procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes. • Preregistration (for example, name verification or reservation, notarization) The business: • Registration in the economy’s largest business city -Is a limited liability company (or its legal equivalent). If there is more than one type of limited • Postregistration (for example, social security registration, liability company in the economy, the limited liability form most common among domestic firms is company seal) chosen. Information on the most common form is obtained from incorporation lawyers or the statistical office. • Obtaining approval from spouse to start a business or to leave -Operates in the economy’s largest business city. For 11 economies the data are also collected for the home to register the company the second largest business city. • Obtaining any gender specific document for company -Performs general industrial or commercial activities such as the production or sale to the public of registration and operation or national identification card goods or services. The business does not perform foreign trade activities and does not handle products subject to a special tax regime, for example, liquor or tobacco. It is not using heavily Time required to complete each procedure (calendar days) polluting production processes. • Does not include time spent gathering information -Does not qualify for investment incentives or any special benefits. -Is 100% domestically owned. • Each procedure starts on a separate day (2 procedures cannot -Has five business owners, none of whom is a legal entity. One business owner holds 30% of the start on the same day) company shares, two owners have 20% of shares each, and two owners have 15% of shares • Procedures fully completed online are recorded as ½ day each. -Is managed by one local director. • Procedure is considered completed once final document is -Has between 10 and 50 employees one month after the commencement of operations, all of them received domestic nationals. • No prior contact with officials -Has start-up capital of 10 times income per capita. -Has an estimated turnover of at least 100 times income per capita. Cost required to complete each procedure (% of income per -Leases the commercial plant or offices and is not a proprietor of real estate. capita) -Has an annual lease for the office space equivalent to one income per capita. • Official costs only, no bribes -Is in an office space of approximately 929 square meters (10,000 square feet). -Has a company deed that is 10 pages long. • No professional fees unless services required by law or commonly used in practice The owners: Paid-in minimum capital (% of income per capita) -Have reached the legal age of majority and are capable of making decisions as an adult. If there • Funds deposited in a bank or with third party before registration is no legal age of majority, they are assumed to be 30 years old. or up to 3 months after incorporation -Are in good health and have no criminal record. -Are married, the marriage is monogamous and registered with the authorities. -Where the answer differs according to the legal system applicable to the woman or man in question (as may be the case in economies where there is legal plurality), the answer used will be the one that applies to the majority of the population. Page 5 Doing Business 2020 Chile Starting a Business - Chile Standardized Company Legal form Sociedad Anónima (SA) – closed corporation Paid-in minimum capital requirement No minimum City Covered Santiago Indicator Chile OECD high income Best Regulatory Performance Procedure – Men (number) 6 4.9 1 (2 Economies) Time – Men (days) 4 9.2 0.5 (New Zealand) Cost – Men (% of income per capita) 2.7 3.0 0.0 (2 Economies) Procedure – Women (number) 6 4.9 1 (2 Economies) Time – Women (days) 4 9.2 0.5 (New Zealand) Cost – Women (% of income per capita) 2.7 3.0 0.0 (2 Economies) Paid-in min. capital (% of income per capita) 0.0 7.6 0.0 (120 Economies) Figure – Starting a Business in Chile – Score 70.6 96.5 98.6 100.0 Procedures Time Cost Paid-in min. capital Figure – Starting a Business in Chile and comparator economies – Ranking and Score DB 2020 Starting a Business Score 0 100 91.4: Chile (Rank: 57) 91.3: Regional Average (OECD high income) 82.1: Peru (Rank: 133) 81.3: Brazil (Rank: 138) 80.4: Argentina (Rank: 141) 76.0: Paraguay (Rank: 160) Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. Page 6 Doing Business 2020 Chile Figure – Starting a Business in Chile – Procedure, Time and Cost Time (days) Cost (% of income per capita) 4 3 3.5 Cost (% of income per capita) 2.5 3 2 Time (days) 2.5 2 1.5 1.5 1 1 0.5 0.5 0 0 1 2 3 4 *5 *6 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 7 Doing Business 2020 Chile Details – Starting a Business in Chile – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Draft online the articles of association and obtain an authentication number Less than one day no charge Agency : Registro de Empresas y Sociedades (online procedure) Entrepreneurs can draft the articles of association online by completing a form that will be submitted throught the Registry of Enterprises and Companies (www.tuempresaenundia.cl). The system will then deliver an authorization number. With this number, the entrepreneur will visit the notary to obtain a digital signature. 2 Register the company with the Registro de Empresas y Sociedades Less than one day UF 0,26 Agency : Registro de Empresas y Sociedades (online procedure) Entrepreneurs can register online (www.tuempresaenundia.cl) at no cost. The system allows users to register (modify, cancel, etc.) a company online, at zero cost. The system provides the certificate of existence immediately, and it automatically assigns a tax payer ID number to the company. The system will require that all partners subscribing the document have an advanced electronic signature (a token), or that they do the process with a notary that uses his own advanced electronic signature. 3 Give notice of initiation of activities to the Internal Revenue Service online Less than one day no charge Agency : Internal Revenue Service (online procedure) Entrepreneurs must submit an "initiation of activities" ("Inicio de Actividades") form before the Chilean IRS, which is a sworn statement submitted to inform that the taxpayer will start to develop economical activities in Chile. The procedure can be carried out through the Chilean IRS website (www.sii.cl). 4 Obtain a digital certificate to enable the issuance of tax documents before the Internal Less than one day Between CLP 12,000 and Revenue Service (online procedure) CLP 17,000 Agency : Company approved by the Internal Revenue Service The digital certificate of an electronic signature certifies the relationship between the signatory or the owner of the certificate. Law No. 20.727 which Modifies Tax Law Regarding the Electronic Invoice and Establishes other Measures, (2014), replaced the use of paper documents for electronic documents. As of 2018, the documents that must be issued or completed online by a company include: invoices, purchase invoices, liquidations of invoices, credit and debit notes, accountant registries. The digital certificate allows companies to pay taxes online with the Internal Revenue Service (http://www.sii.cl). Companies must request the issuance of a certificate from one of the suppliers approved by the Internal Revenue Service which are: • Acepta (www.acepta.com) • E-CertChile Cámara de Comercio de Santiago (www.e-certchile.cl) • E-Sign (www.e-sign.cl) • Certinet (www.certinet.cl • Paperless (www.paperlessla.com) 5 Obtain a Business License (Patente Comercial) from the Municipality 1 day, simultaneous with between 0.25% and 0.5% Agency : Municipality previous procedure of the company's start-up A Business License (Patente Comercial) must be obtained upon business start-up and then capital renewed on a yearly basis. The request to obtain the patente is presented through a form, along with the Tax ID (RUT) and the company's articles of association. The fee to obtain the patente varies per Municipality, between 0.25% and 0.5% of the company's start-up capital, as per Decree 2,385 of 1996. Decree Law 3063/1979 rules that any profession, activity, industry, commerce, art, or any other profitable activity, independent of its denomination, must obtain a Business License from the Municipality. A separate license must be obtained from the corresponding municipality for each of the enterprise’s establishments, offices, warehouses, and so forth. 6 Register with the labor-related accident insurance (Seguro Social contra Riesgos de 1 day, simultaneous with no charge Accidentes del Trabajo y Enfermedades Profesionales) previous procedure Agency : Labor Insurance (Mutuales de Seguridad) According to Law 16.744 (article 15), it is mandatory for the employer to pay an insurance which covers work related accidents and professional illnesses. Entrepreneurs have the option to pay the insurance to the public Institute of Occupational Safety (Instituto de Seguridad Laboral (ISL), former Instituto de Normalización Previsional) or to private nonprofit entities known as Mutuales. In Chile, there are three private Mutuales: • Asociación Chilena de Seguridad. • Mutual de Seguridad de la Cámara Chilena de Construcción. de la construcción. • Instituto de Seguridad del Trabajo. Takes place simultaneously with previous procedure. Page 8 Doing Business 2020 Chile Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of data collection was completed in May 2019. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse (number) To make the data comparable across economies, several assumptions about the construction company, the warehouse project and the utility connections are used. • Submitting all relevant documents and obtaining all necessary clearances, licenses, permits and certificates The construction company (BuildCo): • Submitting all required notifications and receiving all necessary - Is a limited liability company (or its legal equivalent) and operates in the economy’s largest inspections business city. For 11 economies the data are also collected for the second largest business city. • Obtaining utility connections for water and sewerage - Is 100% domestically and privately owned; has five owners, none of whom is a legal entity. Has a licensed architect and a licensed engineer, both registered with the local association of architects • Registering and selling the warehouse after its completion or engineers. BuildCo is not assumed to have any other employees who are technical or licensed Time required to complete each procedure (calendar days) experts, such as geological or topographical experts. - Owns the land on which the warehouse will be built and will sell the warehouse upon its • Does not include time spent gathering information completion. • Each procedure starts on a separate day—though procedures that can be fully completed online are an exception to this rule The warehouse: - Will be used for general storage activities, such as storage of books or stationery. • Procedure is considered completed once final document is received - Will have two stories, both above ground, with a total constructed area of approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 meters (9 feet, 10 inches) high and will be • No prior contact with officials located on a land plot of approximately 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the warehouse is valued at 50 times income per capita. Cost required to complete each procedure (% of income per - Will have complete architectural and technical plans prepared by a licensed architect. If capita) preparation of the plans requires such steps as obtaining further documentation or getting prior • Official costs only, no bribes approvals from external agencies, these are counted as procedures. - Will take 30 weeks to construct (excluding all delays due to administrative and regulatory Building quality control index (0-15) requirements). • Quality of building regulations (0-2) The water and sewerage connections: • Quality control before construction (0-1) - Will be 150 meters (492 feet) from the existing water source and sewer tap. If there is no water • Quality control during construction (0-3) delivery infrastructure in the economy, a borehole will be dug. If there is no sewerage infrastructure, a septic tank in the smallest size available will be installed or built. • Quality control after construction (0-3) - Will have an average water use of 662 liters (175 gallons) a day and an average wastewater flow • Liability and insurance regimes (0-2) of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and • Professional certifications (0-4) a peak wastewater flow of 1,136 liters (300 gallons) a day. - Will have a constant level of water demand and wastewater flow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection. Page 9 Doing Business 2020 Chile Dealing with Construction Permits - Chile Standardized Warehouse Estimated value of warehouse CLP 489,625,344.90 City Covered Santiago Indicator Chile OECD high income Best Regulatory Performance Procedures (number) 12 12.7 None in 2018/19 Time (days) 195 152.3 None in 2018/19 Cost (% of warehouse value) 1.2 1.5 None in 2018/19 Building quality control index (0-15) 13.0 11.6 15.0 (6 Economies) Figure – Dealing with Construction Permits in Chile – Score 72.0 51.3 93.8 86.7 Procedures Time Cost Building quality control index Figure – Dealing with Construction Permits in Chile and comparator economies – Ranking and Score DB 2020 Dealing with Construction Permits Score 0 100 75.9: Chile (Rank: 41) 75.6: Regional Average (OECD high income) 72.5: Peru (Rank: 65) 71.1: Paraguay (Rank: 75) 56.4: Argentina (Rank: 155) 51.9: Brazil (Rank: 170) Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators. Page 10 Doing Business 2020 Chile Figure – Dealing with Construction Permits in Chile – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 0.8 0.7 Cost (% of warehouse value) 150 0.6 Time (days) 0.5 100 0.4 0.3 50 0.2 0.1 0 0 1 *2 *3 4 5 *6 7 8 9 * 10 11 12 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 11 Doing Business 2020 Chile Figure – Dealing with Construction Permits in Chile and comparator economies – Measure of Quality 14 13.0 13.0 11.6 12 11.0 Index score 10 8.4 8.0 8 6 4 2 0 Chile Argentina Brazil Paraguay Peru OECD high income Details – Dealing with Construction Permits in Chile – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Request and obtain indication on water and sewage availability with Sanitation Company 30 days no charge Agency : Sanitation Company BuildCo. requests the availability from the utility company in order to install their services. 2 Obtain results of geotechnical study / soil test 21 days CLP 3,500,000 Agency : Private licensed company BuildCo will request a soil test for the structural calculations for the foundation. Contractors ask for a soil test to ensure that the foundation of the building is solid. The engineer must understand the suitability of the soil for the proposed construction work. It allows to build a solid foundation and avoid structures to be damaged or collapsed or leaned. 3 Request and obtain preliminary information from the Municipality 10 days CLP 18,000 Agency : Municipality BuildCo. requests and obtains a "Certificado de Informaciones Previas" (background information), which entails zoning and planning information. 4 Request and obtain risk assessment from the Regional Sanitary Authority (Secretaría 5 days CLP 16,000 Regional Ministerial de Salud (Seremi)) Agency : Regional Sanitary Authority (Secretaría Regional Ministerial de Salud (Seremi)) Once BuildCo obtained the clearance from the Sanitary Company (utilities) , BuildCo may now request a risk classification from the sanitary authority. The General Urbanism and Construction Ordinance of Chile (“Ordenanza General de Urbanismo y Construcciones) under Article 4.14.2 sets parameters for qualifying industrial or warehousing facilities into 4 categories: Dangerous, Unhealthy / Pollutant, Irritating or Harmless. Based on this Ordinance, warehousing or industrial establishments shall be assessed on a case by case basis by the respective Regional Sanitary Authority (“Secretaría Regional Ministerial (Seremi) de Salud”), taking into account the risks that the building may cause to their workers, neighborhood and community. A warehouse such as the one in the Doing Business case study would likely be rated "Harmless" because it is used for storage of non-hazardous items such as books. 5 Request and obtain water and sewerage supply certificate from Sanitation Company 15days no charge Agency : Sanitation Company Upon receiving the permit from the Regional Sanitary Authority (Secretaría Regional Ministerial de Salud (Seremi)), BuildCo submit this permit to the Municipality as a proof that water and sewerage connection can be obtained. 6 Request and obtain provisional installation permit from the Municipality 5 days no charge Agency : Municipality In parallel with the interaction with the utility company, BuildCo, can request the possibility to have some services while the construction takes place. To obtain a provisional permit for installation of temporary facilities, BuildCo’s architects must meet the Municipality’s architects to review the drawings and designs. This permit enables BuildCo to have bathrooms, electricity, and so forth on the construction site. Page 12 Doing Business 2020 Chile 7 Request and obtain building permit 68 days CLP 2,236,551 Agency : Municipality BuildCo must obtain a municipal building permit before construction starts. An external reviewer is also involved in this process. In 2005, a number of municipalities introduced a pilot program for a one-stop shop (la Ventanilla Transaccional de Trámites Municipales, VTM), an Internet platform where nine proceedings can be completed. The project was expected to be in full operation in 26 municipalities by 2006. The system is expected to cut processing time to 8 days. On January 12, 2006, the Municipality of Santiago introduced major changes to its regulatory plan (plano regulador) to regulate some omissions from the construction ordinance (ordenanza de construcción), without changing the current rules of construction. The cost of the building permit is 1.5% of the construction cost. The construction cost is calculated according to a fee schedule. The fee schedule is not based on a simple classification of buildings. There are two elements to consider: 1) classification based on material and structure used and 2) classification based on the amount of positive attributes that the building has. Regarding classification based on material, one can classify the building based on 9 different categories (A-I) depending on the materials (steel, concrete, wood, etc.) and structures used. Regarding the classification based on positive attributes, one can classify the building into 5 different categories based on the number points the building would obtain following the provided technical guide (design, structure, installations, and finishing of the building). The 5 different categories are: Category 1 – Superior (20 or more points); Category 2 - Medium superior (13-19 points); Category 3 - Medium (6-12 points); Category 4 - Medium inferior (0-5 points); Category 5 - Inferior (based on definition 2.3). The Doing Business warehouse would fall into classification A and obtains 3 points. Thus, the warehouse falls into classification "A4" (A because it is steel and 4 because it receives 3 points). Therefore, the cost per square meter is CLP 114642 8 Request and receive inspection in the middle of construction 1 day no charge Agency : Municipality BuildCo. receives an inspection anytime during the construction period. This revision is done with the in-house engineer or architect hired by BuildCo. 9 Receive connection to water services 45 days CLP 315,671 Agency : Sanitation Company The connection takes place at any time upon BuildCo’s request Request and obtain certificate of compliance for roads and sidewalks from SERVIU 10 days CLP 8,468 10 Agency : SERVIU BuildCo. can request and obtain certificate of compliance for roads and sidewalks fregulations compliance from SERVIU, which is independent from the certificate of urbanization. 11 Request and receive final inspection 1 day no charge Agency : Municipality According to Decree N° 47 (1992) from Minvu (OGUC), this final inspection is a requirement in order to obtain the final project approval. 12 Request and obtain project approval 30 days no charge Agency : Municipality The Municipality is notified of the project's completion (recepción final) after the independent inspector submits a positive project evaluation Takes place simultaneously with previous procedure. Page 13 Doing Business 2020 Chile Details – Dealing with Construction Permits in Chile – Measure of Quality Answer Score Building quality control index (0-15) 13.0 Quality of building regulations index (0-2) 2.0 How accessible are building laws and regulations in your economy? (0-1) Available online; Free 1.0 of charge; In official gazette. Which requirements for obtaining a building permit are clearly specified in the building regulations or on any List of required 1.0 accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in compliance with existing Licensed architect; 1.0 building regulations? (0-1) Licensed engineer. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during construction? (0-2) Inspections by in- 1.0 house engineer; Unscheduled inspections. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. Quality control after construction index (0-3) 3.0 Is there a final inspection required by law to verify that the building was built in accordance with the approved Yes, final inspection 2.0 plans and regulations? (0-2) is done by government agency; Yes, in-house engineer submits report for final inspection; Yes, external engineer submits report for final inspection. Do legally mandated final inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 1.0 Which parties (if any) are held liable by law for structural flaws or problems in the building once it is in use Architect or engineer; 1.0 (Latent Defect Liability or Decennial Liability)? (0-1) Professional in charge of the supervision; Construction company; Owner or investor. Which parties (if any) are required by law to obtain an insurance policy to cover possible structural flaws or No party is required 0.0 problems in the building once it is in use (Latent Defect Liability Insurance or Decennial Insurance)? (0-1) by law to obtain insurance . Professional certifications index (0-4) 4.0 What are the qualification requirements for the professional responsible for verifying that the architectural plans Minimum number of 2.0 or drawings are in compliance with existing building regulations? (0-2) years of experience; University degree in architecture or engineering; Being a registered architect or engineer. Page 14 Doing Business 2020 Chile What are the qualification requirements for the professional who supervises the construction on the ground? (0- Minimum number of 2.0 2) years of experience; University degree in engineering, construction or construction management; Being a registered architect or engineer. Page 15 Doing Business 2020 Chile Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection (number) To make the data comparable across economies, several assumptions about the warehouse, the electricity connection and the monthly consumption are used. • Submitting all relevant documents and obtaining all necessary clearances and permits The warehouse: • Completing all required notifications and receiving all necessary - Is owned by a local entrepreneur and is used for storage of goods. inspections - Is located in the economy’s largest business city. For 11 economies the data are also collected for • Obtaining external installation works and possibly purchasing the second largest business city. material for these works - Is located in an area where similar warehouses are typically located and is in an area with no physical constraints. For example, the property is not near a railway. • Concluding any necessary supply contract and obtaining final - Is a new construction and is being connected to electricity for the first time. supply - Has two stories with a total surface area of approximately 1,300.6 square meters (14,000 square Time required to complete each procedure (calendar days) feet). The plot of land on which it is built is 929 square meters (10,000 square feet). • Is at least 1 calendar day The electricity connection: • Each procedure starts on a separate day - Is a permanent one with a three-phase, four-wire Y connection with a subscribed capacity of 140- • Does not include time spent gathering information kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 kilowatt (kW). - Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution • Reflects the time spent in practice, with little follow-up and no network and is either overhead or underground, whichever is more common in the area where the prior contact with officials warehouse is located and requires works that involve the crossing of a 10-meter road (such as by excavation or overhead lines) but are all carried out on public land. There is no crossing of other Cost required to complete each procedure (% of income per owners’ private property because the warehouse has access to a road. capita) - Does not require work to install the internal wiring of the warehouse. This has already been • Official costs only, no bribes completed up to and including the customer’s service panel or switchboard and the meter base. • Value added tax excluded The monthly consumption: The reliability of supply and transparency of tariffs index (0-8) - It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 p.m. (8 hours • Duration and frequency of power outages (0–3) a day), with equipment utilized at 80% of capacity on average and that there are no electricity cuts (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours • Tools to monitor power outages (0–1) (kWh); hourly consumption is 112 kWh. • Tools to restore power supply (0–1) - If multiple electricity suppliers exist, the warehouse is served by the cheapest supplier. - Tariffs effective in January of the current year are used for calculation of the price of electricity for • Regulatory monitoring of utilities’ performance (0–1) the warehouse. Although January has 31 days, for calculation purposes only 30 days are used. • Financial deterrents limiting outages (0–1) • Transparency and accessibility of tariffs (0–1) Price of electricity (cents per kilowatt-hour)* • Price based on monthly bill for commercial warehouse in case study *Note: Doing Business measures the price of electricity, but it is not included in the ease of doing business score nor in the ranking on the ease of getting electricity. Page 16 Doing Business 2020 Chile Getting Electricity - Chile Standardized Connection Name of utility Enel Distribución Chile S.A. Price of electricity (US cents per kWh) 10.2 City Covered Santiago Indicator Chile OECD high income Best Regulatory Performance Procedures (number) 5 4.4 3 (28 Economies) Time (days) 43 74.8 18 (3 Economies) Cost (% of income per capita) 49.3 61.0 0.0 (3 Economies) Reliability of supply and transparency of tariff index (0-8) 7 7.4 8 (26 Economies) Figure – Getting Electricity in Chile – Score 66.7 89.1 99.4 87.5 Reliability of supply and transparency of Procedures Time Cost tariff index Figure – Getting Electricity in Chile and comparator economies – Ranking and Score DB 2020 Getting Electricity Score 0 100 85.9: Regional Average (OECD high income) 85.7: Chile (Rank: 39) 74.5: Peru (Rank: 88) 72.8: Brazil (Rank: 98) 70.4: Paraguay (Rank: 109) 70.0: Argentina (Rank: 111) Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity. Figure – Getting Electricity in Chile – Procedure, Time and Cost Time (days) Cost (% of income per capita) 50 40 Cost (% of income per capita) 35 40 30 Time (days) 25 30 20 20 15 10 10 5 0 0 1 *2 *3 4 5 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures Page 17 Doing Business 2020 Chile reflected here, see the summary below. Figure – Getting Electricity in Chile and comparator economies – Measure of Quality 8 7.4 7 7 6 6 6 Index score 5 5 4 3 3 2 1 0 Chile Argentina Brazil Paraguay Peru OECD high income Page 18 Doing Business 2020 Chile Details – Getting Electricity in Chile – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Submit application to Enel Distribución Chile S.A. and await estimate 15 calendar days CLP 526,775.3 Agency : Enel Distribución Chile S.A. The customer submits an application with Enel Distribución Chile S.A. in person. Based on the application Enel Distribución Chile S.A. will prepare a technical project for the connection and will issue an estimate of the costs. Enel Distribución Chile S.A. requires a number of supporting documents with the application: • Address of the premise that is to be connected • Sketch of the location of the premise • Certificate of prior conditions ("Certificado de condiciones previas") • Construction plans detailing the layout of the floors (not needed for a warehouse) • Plan of the layout of infrastructure services (such as water and gas pipes) that might interfere with the civil works. Specifications of the type of connection required (overhead/underground, 1- or 3-phased, traditional or with a concentrador de medida) • Required load (in kW) • Type of consumption tariff requested, which can be for example AT-3, AT-4.3 if the metering is for medium voltage or BT-3, BT 4.3 if metering is for low voltage. The decision on which tariff to choose will depend on the consumption profile for the warehouse. • Coordinates of the customer (Name, tax registration number, bank account information, commercial address, telephone, legal representative) • Coordinates of the applicant (Name, tax registration number, bank account information, commercial address, telephone) • Coordinates of the contact person on the construction site to coordinate connection works. • Date by which the supply will be need to be turned on • In case that the maximum load will only be reached over time, indicate the a profile of the timeline 2 Receive external inspection by Enel Distribución Chile S.A. 3 calendar days CLP 0 Agency : Enel Distribución Chile S.A. After receiving the application, Enel Distribución Chile S.A. will conduct an inspection in situ to identify the exact connection point. 3 Sign supply contract before a notary 1 calendar day CLP 5,000 Agency : Notary If the customer is the owner of a limited company, he has to sign the supply contract in front of a notary attesting to his role as the owner of the company. To sign the supply contract the following documents have to be submitted: • The declaration in front of the notary attesting to the fact that the customer is the owner of the building. If the owner is a company the declaration has to clarify the persons that are legally responsible for the actions of the company. • Certificate of the number of the relevant municipality (“Certificado de número Municipal”). • Copy of the identity document of the owner or legal representative of the company • Tax registration number (Rol Único Tributario - UT). • Coordinates of the person receiving the cost estimate for the connection and future consumption bills. 4 Pay connection costs and await completion of connection works by Enel Distribución Chile 27 calendar days CLP 4,292,484.16 S.A. Agency : Enel Distribución Chile S.A. The customer accepts the contract and submits the necessary supporting material such as the declaration in front of the notary and the power of attorney. For the finalization of the contract, the acceptance of the cost estimate has to be accepted and paid for and the inspection certificate issued by the "Superintendencia de Electricidad y Combustibles (SEC)" on the internal wiring (Anexo TE-1 SEC) has to be submitted. The payment of the estimate can be done in one of the three offices of Enel Distribución Chile S.A. determined for this purpose. For 3-phase connections the metering material is included in connection tariff. Other items included in the tariff are current transformers and other material, inspections, approvals with the municipality and the civil works (excavation permit) needed for the connection. The price of the excavation permit to open a sidewalk (2 m width * 4 m long) for a period of 6 days in the town of Santiago is about 60,000 CLP. Once the supply contract has been signed, Enel Distribución Chile S.A. will then carry out the actual connection works. Material for the connection is provided by Enel Distribución Chile S.A. and always available. 5 Receive meter installation and final connection 1 calendar day CLP 0 Agency : Enel Distribución Chile S.A. The last step of the connection works (meter installation) can only be done after the internal wiring installation has been approved by the Superintendencia de Electricidad y Combustibles (SEC). A minimum delay of two weeks is needed for this step to allow SEC to inform the surrounding community of the cut in electricity in order to connect the new customer. Page 19 Doing Business 2020 Chile Takes place simultaneously with previous procedure. Page 20 Doing Business 2020 Chile Details – Getting Electricity in Chile – Measure of Quality Answer Reliability of supply and transparency of tariff index (0-8) 7 Total duration and frequency of outages per customer a year (0-3) 2 System average interruption duration index (SAIDI) 2.9 System average interruption frequency index (SAIFI) 1.5 What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 3.0 Mechanisms for monitoring outages (0-1) 1 Does the distribution utility use automated tools to monitor outages? Yes Mechanisms for restoring service (0-1) 1 Does the distribution utility use automated tools to restore service? Yes Regulatory monitoring (0-1) 1 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of supply? Yes Financial deterrents aimed at limiting outages (0-1) 1 Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages exceed a certain cap? Yes Communication of tariffs and tariff changes (0-1) 1 Are effective tariffs available online? Yes Link to the website, if available online https://www.eneldistribuci on.cl/tarifas Are customers notified of a change in tariff ahead of the billing cycle? Yes Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Page 21 Doing Business 2020 Chile Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on immovable property To make the data comparable across economies, several assumptions about the parties to the (number) transaction, the property and the procedures are used. • Preregistration procedures (for example, checking for liens, The parties (buyer and seller): notarizing sales agreement, paying property transfer taxes) - Are limited liability companies (or the legal equivalent). • Registration procedures in the economy's largest business city. - Are located in the periurban (that is, on the outskirts of the city but still within its official limits) • Postregistration procedures (for example, filling title with area of the economy’s largest business city. For 11 economies the data are also collected for the municipality) second largest business city. - Are 100% domestically and privately owned. Time required to complete each procedure (calendar days) - Perform general commercial activities. • Does not include time spent gathering information The property (fully owned by the seller): • Each procedure starts on a separate day - though procedures - Has a value of 50 times income per capita, which equals the sale price. that can be fully completed online are an exception to this rule - Is fully owned by the seller. • Procedure is considered completed once final document is - Has no mortgages attached and has been under the same ownership for the past 10 years. received - Is registered in the land registry or cadastre, or both, and is free of title disputes. • No prior contact with officials - Is located in a periurban commercial zone (that is, on the outskirts of the city but still within its official limits), and no rezoning is required. Cost required to complete each procedure (% of property - Consists of land and a building. The land area is 557.4 square meters (6,000 square feet). A two- value) story warehouse of 929 square meters (10,000 square feet) is located on the land. The warehouse is 10 years old, is in good condition, has no heating system and complies with all safety standards, • Official costs only (such as administrative fees, duties and building codes and legal requirements. The property, consisting of land and building, will be taxes). transferred in its entirety. • Value Added Tax, Capital Gains Tax and illicit payments are - Will not be subject to renovations or additional construction following the purchase. excluded - Has no trees, natural water sources, natural reserves or historical monuments of any kind. - Will not be used for special purposes, and no special permits, such as for residential use, Quality of land administration index (0-30) industrial plants, waste storage or certain types of agricultural activities, are required. - Has no occupants, and no other party holds a legal interest in it. • Reliability of infrastructure index (0-8) • Transparency of information index (0–6) • Geographic coverage index (0–8) • Land dispute resolution index (0–8) • Equal access to property rights index (-2–0) Page 22 Doing Business 2020 Chile Registering Property - Chile Indicator Chile OECD high income Best Regulatory Performance Procedures (number) 6 4.7 1 (5 Economies) Time (days) 28.5 23.6 1 (2 Economies) Cost (% of property value) 1.1 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 14.0 23.2 None in 2018/19 Figure – Registering Property in Chile – Score 58.3 86.8 92.7 46.7 Procedures Time Cost Quality of the land administration index Figure – Registering Property in Chile and comparator economies – Ranking and Score DB 2020 Registering Property Score 0 100 77.0: Regional Average (OECD high income) 72.1: Peru (Rank: 55) 71.1: Chile (Rank: 63) 66.1: Paraguay (Rank: 80) 56.7: Argentina (Rank: 123) 54.1: Brazil (Rank: 133) Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators. Page 23 Doing Business 2020 Chile Figure – Registering Property in Chile – Procedure, Time and Cost Time (days) Cost (% of property value) 1.2 25 1 Cost (% of property value) 20 0.8 Time (days) 15 0.6 10 0.4 5 0.2 0 0 1 *2 *3 4 5 6 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 24 Doing Business 2020 Chile Figure – Registering Property in Chile and comparator economies – Measure of Quality 25 23.2 20 18.0 Index score 16.3 15 14.0 13.5 12.0 10 5 0 Chile Argentina Brazil Paraguay Peru OECD high income Details – Registering Property in Chile – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 The Lawyer drafts the sale and purchase agreement while carrying out due diligence 15 days CLP 4,896,253.45; (About research on the property and parties 1% of transaction value) Agency : Lawyer A lawyer is contracted to conduct due diligence of the property’s legal history, for not less than 10 years. The lawyer will also obtain the documents described in Procedures 2-3 from the Property Registry and the Treasury, as well as undertake the registration formalities. Lawyer fees for the study of the titles, drafting of the contract and completing all the formalities involved in the registration Procedure range between 1 and 2.5% of the transaction value. While it is not legally required to employ a lawyer for the study and the registration, it is common practice. 2 Request the folder of property titles for the past 10 years (it includes the certificate of 5 days CLP 13,500 encumbrances "GP" and the ‘Certificado de Vigencia’) from the Registry Agency : Property Registry (Conservadores digitales) The folder of property titles for the past 10 years including the encumbrance certificate (certificado de Gravámenes y Prohibiciones), and the ‘Certificado de Vigencia’ can be obtained in a sole request at the official website of "conservadores digitales" (www.conservador.cl). The folder is usually requested by the lawyer responsible for the due diligence of the property. The folder is received by email within 5 days after request and payment online. 3 Obtain evidence of complete payment of land tax from Treasury (Servicios de Tesorerías) Less than one day, no charge Agency : Treasury (Servicios de Tesorerías) online The Property Taxes Debt Certificated (Certificado de Deuda de Contribuciones) is granted by the Treasury (Tesorería General de la República) and can be requested online www.tesoreria.cl. This document certificates that the property does not have debts regarding property taxes. The Notary and Property Registry require the document for the execution of the public deed and the registration in the Real Estate Office. 4 Execution and signing of the public deed 2 days CLP 158,000; (CLP 30,000 Agency : Public Notary office (copies and other Upon completion of the due diligence, the sale and purchase agreement is notarized. Both parties expenses at the Notary’s have to sign in front of a Notary. Jointly with the execution of the public deed, the Public Notary office) + 0.1% of property has the duty of complete the declaration about property transfer form (2890 Form). Two copies of price with a maximum this form are required in order to register the ownership transfer in the corresponding Property Registry. The Property Registry conserves one copy, and the other one is sent to the IRS (Servicio charge of CLP 128,000 de Impuesto Internos) with the purpose of completing and updating the property fiscal cadaster. (Notary’s fees)) 5 Registration of the public deed at the Real Estate Office 11 days CLP 264,800; (For Agency : Real Estate Office properties located in the According to the Judiciary Decree 588 of November 27, 1998, In the case of properties located in cities of Santiago, the cities of Santiago, Valparaíso and Viña del Mar the registration cost is 0.2% of the property Valparaíso and Viña del value, being the maximum charge CLP 256.000 (property value of CLP 128.000.000). However, Mar the registration cost is since the regulation dated since 1998, the amount has been updated accordingly in the past 0.2% of the property value, years. For 2019, It's estimated at CLP 262.200 (plus CLP 2.600 per copy) being the maximum The parties can request the transfer personally at the registry the property transfer or online at the charge CLP 262.200 plus http://www.cbrsantiago.cl/portall_cbr/ website . The Registry request at least the following CLP 2.600 per copy (1 documents for registration: (i) 2890 Form; (ii) Property Debt Tax Certificate; (iii) purchase copy estimated)) agreement public deed and will check the payment of all taxes related to the property. The registry has a digital record of all requests, but in the registry, all the transfer is done on paper. The Registry provides the information of the transaction and the value of the property and taxes to the SII within the first ten days of the following month. The time limit for the registry’s decision is 2 days, and there is a 2-month period for the parties to amend any mistake. Note: The registration time refers to the Registry in Santiago. Outside of Santiago, the time would be longer (up to 3 weeks). Page 25 Doing Business 2020 Chile 6 Obtain a Property Certificate and a Mortgages and Ownership Limitations Certificate Less than one day, no charge Agency : Real Estate Office online Once the registration has been completed, it is recommended to obtain from the Conservador de Bienes Raíces de Santiago (the Real Estate Office) (i) a copy of the Property Certificate stating the new ownership, (ii) Mortgages and Ownership Limitations Certificate, stating the new ownership is clean. While this procedure is not legally required, it ensures that all the information is correct. If the registration was done through the portal, the applicant can download the updated ownership certificate at the http://www.cbrsantiago.cl/portall_cbr/ website. There is no need for title insurance in Chile since the Registrar and the Notaries must personally answer for their mistakes on their functions. They hire responsible insurance for these cases. Outside of Santiago, it may take up to 2 weeks to obtain the title and certificates. Takes place simultaneously with previous procedure. Page 26 Doing Business 2020 Chile Details – Registering Property in Chile – Measure of Quality Answer Score Quality of the land administration index (0-30) 14.0 Reliability of infrastructure index (0-8) 2.0 Type of land registration system in the economy: Dual system (Title & Deed) What is the institution in charge of immovable property registration? Conservador de Bienes y Raices de Santiago In what format are past and newly issued land records kept at the immovable property registry of the largest Computer/Scanned 1.0 business city of the economy —in a paper format or in a computerized format (scanned or fully digital)? Is there a comprehensive and functional electronic database for checking for encumbrances (liens, mortgages, Yes 1.0 restrictions and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: Santiago City Hall (Municipalidad de Santiago) In what format are past and newly issued cadastral plans kept at the mapping agency of the largest business Paper 0.0 city of the economy—in a paper format or in a computerized format (scanned or fully digital)? Is there an electronic database for recording boundaries, checking plans and providing cadastral information No 0.0 (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral or mapping agency Separate databases 0.0 kept in a single database, in different but linked databases or in separate databases? Do the immovable property registration agency and cadastral or mapping agency use the same identification No 0.0 number for properties? Transparency of information index (0–6) 3.5 Who is able to obtain information on land ownership at the agency in charge of immovable property registration Freely accessible by 1.0 in the largest business city? anyone Is the list of documents that are required to complete any type of property transaction made publicly available– Yes, online 0.5 and if so, how? Link for online access: https://www.conserva dor.cl/portal/tramites_ registros Is the applicable fee schedule for any type of property transaction at the agency in charge of immovable Yes, online 0.5 property registration in the largest business city made publicly available–and if so, how? Link for online access: https://www.conserva dor.cl/portal/tramites_ registros Does the agency in charge of immovable property registration agency formally commit to deliver a legally Yes, online 0.5 binding document that proves property ownership within a specific timeframe –and if so, how does it communicate the service standard? Link for online access: https://www.conserva dor.cl/portal/tramites_ registros Is there a specific and independent mechanism for filing complaints about a problem that occurred at the agency No 0.0 in charge of immovable property registration? Contact information: Are there publicly available official statistics tracking the number of transactions at the immovable property No 0.0 registration agency? Number of property transfers in the largest business city in 2018: Who is able to consult maps of land plots in the largest business city? Anyone who pays the 0.5 official fee Is the applicable fee schedule for accessing maps of land plots made publicly available—and if so, how? Yes, on public boards 0.5 Page 27 Doing Business 2020 Chile Link for online access: Does the cadastral/mapping agency formally specifies the timeframe to deliver an updated cadastral plan—and No 0.0 if so, how does it communicate the service standard? Link for online access: Is there a specific and independent mechanism for filing complaints about a problem that occurred at the No 0.0 cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 4.0 Are all privately held land plots in the largest business city formally registered at the immovable property Yes 2.0 registry? Are all privately held land plots in the economy formally registered at the immovable property registry? No 0.0 Are all privately held land plots in the largest business city mapped? Yes 2.0 Are all privately held land plots in the economy mapped? No 0.0 Land dispute resolution index (0–8) 5.5 Does the law require that all property sale transactions be registered at the immovable property registry to make Yes 1.5 them opposable to third parties? Legal basis: Art. 686 and Art.724 of the Código Civil and Reglamento del Registro Conservatorio de Bienes Raíces Is the system of immovable property registration subject to a state or private guarantee? Yes 0.5 Type of guarantee: State guarantee Legal basis: "Constitución Política de la Rerpública de Chile" "Código Órganico de Tribunales" (Art. 446), "Código Civil" and "Reglamento del Registro Conservatorio de Bienes Raíces" Is there a is a specific, out-of-court compensation mechanism to cover for losses incurred by parties who Yes 0.5 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Legal basis: Codigo organico de tribunales art 473. Does the legal system require a control of legality of the documents necessary for a property transaction (e.g., Yes 0.5 checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Notary; Does the legal system require verification of the identity of the parties to a property transaction? Yes 0.5 If yes, who is responsible for verifying the identity of the parties? Registrar; Notary; Is there a national database to verify the accuracy of government issued identity documents? Yes 1.0 What is the Court of first instance in charge of a case involving a standard land dispute between two local The Juzgado de businesses over tenure rights for a property worth 50 times gross national income (GNI) per capita and located Letras (first instance) in the largest business city? How long does it take on average to obtain a decision from the first-instance court for such a case (without Between 2 and 3 1.0 appeal)? years Are there publicly available statistics on the number of land disputes at the economy level in the first instance No 0.0 court? Number of land disputes in the economy in 2018: Page 28 Doing Business 2020 Chile Equal access to property rights index (-2–0) -1.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes Do married men and married women have equal ownership rights to property? No -1.0 Page 29 Doing Business 2020 Chile Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of indicators. The depth of credit • Rights of borrowers and lenders through collateral laws (0-10) information index measures rules and practices affecting the coverage, scope and accessibility of • Protection of secured creditors’ rights through bankruptcy laws credit information available through a credit registry or a credit bureau. The strength of legal rights (0-2) index measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first determined whether a unitary Depth of credit information index (0–8) secured transactions system exists. Then two case scenarios, case A and case B, are used to • Scope and accessibility of credit information distributed by determine how a nonpossessory security interest is created, publicized and enforced according to credit bureaus and credit registries (0-8) the law. Special emphasis is given to how the collateral registry operates (if registration of security interests is possible). The case scenarios involve a secured borrower, company ABC, and a Credit bureau coverage (% of adults) secured lender, BizBank. • Number of individuals and firms listed in largest credit bureau In some economies the legal framework for secured transactions will allow only case A or case B as a percentage of adult population (not both) to apply. Both cases examine the same set of legal provisions relating to the use of movable collateral. Credit registry coverage (% of adults) • Number of individuals and firms listed in credit registry as a Several assumptions about the secured borrower (ABC) and lender (BizBank) are used: percentage of adult population - ABC is a domestic limited liability company (or its legal equivalent). - ABC has up to 50 employees. - ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. - Both ABC and BizBank are 100% domestically owned. The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests). In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets. Page 30 Doing Business 2020 Chile Getting Credit - Chile Indicator Chile OECD high income Best Regulatory Performance Strength of legal rights index (0-12) 4 6.1 12 (5 Economies) Depth of credit information index (0-8) 7 6.8 8 (53 Economies) Credit registry coverage (% of adults) 59.1 24.4 100.0 (2 Economies) Credit bureau coverage (% of adults) 44.0 66.7 100.0 (14 Economies) Figure – Getting Credit in Chile – Score 55.0 Score - Getting Credit Figure – Getting Credit in Chile and comparator economies – Ranking and Score DB 2020 Getting Credit Score 0 100 75.0: Peru (Rank: 37) 64.3: Regional Average (OECD high income) 55.0: Chile (Rank: 94) 50.0: Argentina (Rank: 104) 50.0: Brazil (Rank: 104) 40.0: Paraguay (Rank: 132) Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index. Page 31 Doing Business 2020 Chile Figure – Legal Rights in Chile and comparator economies 8 7 7 6.1 6 Index Score 5 4 4 3 2 2 2 1 1 0 Chile Argentina Brazil Paraguay Peru OECD high income Page 32 Doing Business 2020 Chile Details – Legal Rights in Chile Strength of legal rights index (0-12) 4 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional equivalents No to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without requiring a specific description No of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a specific description of Yes collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and replacements of the Yes original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties; Yes and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by asset type, with an Yes electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? No Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed online by any interested third No party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency procedure? No Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? No Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure? Does the law No protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow the secured creditor to sell No the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Chile and comparator economies 8.2 8 8 8 8 7.8 Index Score 7.6 7.4 7.2 7 7 7 6.8 6.8 6.6 6.4 6.2 6 Chile Argentina Brazil Paraguay Peru OECD high income Page 33 Doing Business 2020 Chile Details – Credit Information in Chile Depth of credit information index (0-8) Credit bureau Credit registry Score Are data on both firms and individuals distributed? Yes Yes 1 Are both positive and negative credit data distributed? No Yes 1 Are data from retailers or utility companies - in addition to data from banks and Yes No 1 financial institutions - distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries No No 0 that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? Yes Yes 1 By law, do borrowers have the right to access their data in the credit bureau or Yes Yes 1 credit registry? Can banks and financial institutions access borrowers’ credit information online Yes Yes 1 (for example, through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help Yes No 1 banks and financial institutions assess the creditworthiness of borrowers? Total Score ("yes" to either public bureau or private registry) 7 Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 5,365,370 7,379,981 Number of firms 280,589 198,260 Total 5,645,959 7,578,241 Percentage of adult population 44.0 59.1 Page 34 Doing Business 2020 Chile Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions • Extent of disclosure index (0–10): Disclosure, review, and To make the data comparable across economies, a case study uses several assumptions about approval requirements for related-party transactions the business and the transaction. • Extent of director liability index (0–10): Ability of minority shareholders to sue and hold interested directors liable for The business (Buyer): prejudicial related-party transactions; Available legal - Is a publicly traded corporation listed on the economy’s most important stock exchange. remedies (damages, disgorgement of profits, disqualification - Has a board of directors and a chief executive officer (CEO) who may legally act on behalf of from managerial position(s) for one year or more, rescission of Buyer where permitted, even if this is not specifically required by law. the transaction) - Has a supervisory board in economies with a two-tier board system on which Mr. James appointed 60% of the shareholder-elected members. • Ease of shareholder suits index (0–10): Access to internal - Has not adopted bylaws or articles of association that go beyond the minimum requirements. corporate documents; Evidence obtainable during trial and allocation of legal expenses Does not follow codes, principles, recommendations or guidelines that are not mandatory. - Is a manufacturing company with its own distribution network. • Extent of conflict of interest regulation index (0-30): Sum of the extent of disclosure, extent of director liability and ease of The transaction involves the following details: shareholder suits indices - Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two directors to • Extent of shareholder rights index (0-6): Shareholders’ rights Buyer’s five-member board. and role in major corporate decisions - Mr. James also owns 90% of Seller, a company that operates a chain of retail hardware stores. Seller recently closed a large number of its stores. • Extent of ownership and control index (0-7): Governance - Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand Buyer’s safeguards protecting shareholders from undue board control distribution of its food products, a proposal to which Buyer agrees. The price is equal to 10% of and entrenchment Buyer’s assets and is higher than the market value. • Extent of corporate transparency index (0-7): Corporate - The proposed transaction is part of the company’s principal activity and is not outside the transparency on ownership stakes, compensation, audits and authority of the company. financial prospects - Buyer enters into the transaction. All required approvals are obtained, and all required disclosures made—that is, the transaction was not entered into fraudulently. • Extent of shareholder governance index (0–20): Sum of the - The transaction causes damages to Buyer. Shareholders sue Mr. James and the executives and extent of shareholders rights, extent of ownership and control directors that approved the transaction. and extent of corporate transparency indices • Strength of minority investor protection index (0–50): Sum of the extent of conflict of interest regulation and extent of shareholder governance indices Page 35 Doing Business 2020 Chile Protecting Minority Investors - Chile Stock exchange information Stock exchange Santiago Stock Exchange Stock exchange URL http://www.bolsadesantiago.com Listed firms with equity securities 92 City Covered Santiago Indicator Chile OECD high income Best Regulatory Performance Extent of disclosure index (0-10) 8.0 6.5 10 (13 Economies) Extent of director liability index (0-10) 6.0 5.3 10 (3 Economies) Ease of shareholder suits index (0-10) 7.0 7.3 10 (Djibouti) Extent of shareholder rights index (0-6) 6.0 4.7 6 (19 Economies) Extent of ownership and control index (0-7) 4.0 4.5 7 (9 Economies) Extent of corporate transparency index (0-7) 2.0 5.7 7 (13 Economies) Figure – Protecting Minority in Chile – Score 66.0 Score - Protecting Minority Investors Figure – Protecting Minority Investors in Chile and comparator economies – Ranking and Score DB 2020 Protecting Minority Investors Score 0 100 68.2: Regional Average (OECD high income) 68.0: Peru (Rank: 45) 66.0: Chile (Rank: 51) 62.0: Argentina (Rank: 61) 62.0: Brazil (Rank: 61) 34.0: Paraguay (Rank: 143) Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index. Page 36 Doing Business 2020 Chile Figure – Protecting Minority Investors in Chile and comparator economies – Measure of Quality Chile 2 6 8 4 6 7 Argentina 5 2 7 5 6 6 Brazil 6 8 5 4 4 4 Paraguay 0 5 6 0 6 Peru 5 6 9 2 6 6 OECD high income 5.6 5.6 6.6 4.3 4.5 7.4 0 5 10 15 20 25 30 35 40 Sub-Indicator Score Extent of corporate transparency index (0-7) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-7) Extent of shareholder rights index (0-6) Ease of shareholder suits index (0-10) Page 37 Doing Business 2020 Chile Details – Protecting Minority Investors in Chile – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-30) Extent of disclosure index (0-10) 8.0 Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) Board of directors 2.0 excluding interested members Must an external body review the terms of the transaction before it takes place? (0-1) No 0.0 Must Mr. James disclose his conflict of interest to the board of directors? (0-2) Full disclosure of all 2.0 material facts Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Must Buyer immediately disclose the transaction to the public? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Extent of director liability index (0-10) 6.0 Can shareholders representing 10% of Buyer's share capital sue for the damage the transaction caused to Yes 1.0 Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0-2) Liable if negligent 1.0 Can shareholders hold the other directors liable for the damage the transaction caused to Buyer? (0-2) Liable if negligent 1.0 Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by shareholders? (0-1) Yes 1.0 Must Mr. James repay profits made from the transaction upon a successful claim by shareholders? (0-1) Yes 1.0 Is Mr. James disqualified upon a successful claim by shareholders? (0-1) Yes 1.0 Can a court void the transaction upon a successful claim by shareholders? (0-2) Only in case of fraud 0.0 or bad faith Ease of shareholder suits index (0-10) 7.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the transaction documents? No 0.0 (0-1) Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) Any relevant 3.0 document Can the plaintiff request categories of documents from the defendant without identifying specific ones? (0-1) Yes 1.0 Can the plaintiff directly question the defendant and witnesses at trial? (0-2) Preapproved 1.0 questions only Is the level of proof required for civil suits lower than that of criminal cases? (0-1) Yes 1.0 Can shareholder plaintiffs recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-20) Extent of shareholder rights index (0-6) 6.0 Does the sale of 51% of Buyer's assets require shareholder approval? Yes 1.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of shareholders? Yes 1.0 Must Buyer obtain its shareholders’ approval every time it issues new shares? Yes 1.0 Do shareholders automatically receive preemption rights every time Buyer issues new shares? Yes 1.0 Do shareholders elect and dismiss the external auditor? Yes 1.0 Are changes to the rights of a class of shares only possible if the holders of the affected shares approve? Yes 1.0 Extent of ownership and control index (0-7) 4.0 Page 38 Doing Business 2020 Chile Is it forbidden to appoint the same individual as CEO and chairperson of the board of directors? Yes 1.0 Must the board of directors include independent and nonexecutive board members? No 0.0 Can shareholders remove members of the board of directors without cause before the end of their term? No 0.0 Must the board of directors include a separate audit committee exclusively comprising board members? No 0.0 Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Buyer? Yes 1.0 Must Buyer pay declared dividends within a maximum period set by law? Yes 1.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? Yes 1.0 Extent of corporate transparency index (0-7) 2.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? No 0.0 Must Buyer disclose information about board members’ primary employment and directorships in other No 0.0 companies? Must Buyer disclose the compensation of individual managers? No 0.0 Must a detailed notice of general meeting be sent 21 days before the meeting? No 0.0 Can shareholders representing 5% of Buyer’s share capital put items on the general meeting agenda? No 0.0 Must Buyer's annual financial statements be audited by an external auditor? Yes 1.0 Must Buyer disclose its audit reports to the public? Yes 1.0 Page 39 Doing Business 2020 Chile Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was completed in May 2019 covering for the Paying Taxes indicator calendar year 2018 (January 1, 2018 – December 31, 2018). See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in 2018 (number Using a case scenario, Doing Business records taxes and mandatory contributions a medium size per year adjusted for electronic and joint filing and payment) company must pay in a year, and measures the administrative burden of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of • Total number of taxes and contributions paid or withheld, filing and payments, time taken to comply with tax laws, time taken to comply with the including consumption taxes (value added tax, sales tax or requirements of postfiling processes and time waiting. goods and service tax) • Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: - TaxpayerCo is a medium-size business that started operations on January 1, 2017. It produces Time required to comply with 3 major taxes (hours per year) ceramic flowerpots and sells them at retail. All taxes and contributions recorded are paid in the second year of operation (calendar year 2018). Taxes and mandatory contributions are measured • Collecting information, computing tax payable at all levels of government. • Preparing separate tax accounting books, if required • Completing tax return, filing with agencies The VAT refund process: - In June 2018, TaxpayerCo. makes a large capital purchase: the value of the machine is 65 times • Arranging payment or withholding income per capita of the economy. Sales are equally spread per month (1,050 times income per capita divided by 12) and cost of goods sold are equally expensed per month (875 times income Total tax and contribution rate (% of commercial profits) per capita divided by 12). The machinery seller is registered for VAT and excess input VAT incurred • Profit or corporate income tax in June will be fully recovered after four consecutive months if the VAT rate is the same for inputs, sales and the machine and the tax reporting period is every month. Input VAT will exceed Output • Social contributions, labor taxes paid by employer VAT in June 2018. • Property and property transfer taxes The corporate income tax audit process: • Dividend, capital gains, financial transactions taxes - An error in calculation of income tax liability (for example, use of incorrect tax depreciation rates, • Waste collection, vehicle, road and other taxes or incorrectly treating an expense as tax deductible) leads to an incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. discovered the error and voluntarily notified the Postfiling Index tax authority. The value of the underpaid income tax liability is 5% of the corporate income tax • Time to comply with VAT refund (hours) liability due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period. • Time to obtain VAT refund (weeks) • Time to comply with a corporate income tax correction (hours) • Time to complete a corporate income tax correction (weeks) Page 40 Doing Business 2020 Chile Paying Taxes - Chile Indicator Chile OECD high income Best Regulatory Performance Payments (number per year) 7 10.3 3 (2 Economies) Time (hours per year) 296 158.8 49 (3 Economies) Total tax and contribution rate (% of profit) 34.0 39.9 26.1 (33 Economies) Postfiling index (0-100) 57.0 86.7 None in 2018/19 Figure – Paying Taxes in Chile – Score 93.3 61.8 88.9 57.0 Payments Time Total tax and contribution rate Postfiling index Figure – Paying Taxes in Chile and comparator economies – Ranking and Score DB 2020 Paying Taxes Score 0 100 84.3: Regional Average (OECD high income) 75.3: Chile (Rank: 86) 65.8: Peru (Rank: 121) 64.1: Paraguay (Rank: 126) 49.3: Argentina (Rank: 170) 34.4: Brazil (Rank: 184) Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold. Page 41 Doing Business 2020 Chile Figure – Paying Taxes in Chile and comparator economies – Measure of Quality 100 90 86.7 80 Index score 70 60 57.0 47.9 46.6 50 40 30 19.2 20 7.8 10 0 Chile Argentina Brazil Paraguay Peru OECD high income Page 42 Doing Business 2020 Chile Details – Paying Taxes in Chile Tax or Payments Notes on Time (hours) Statutory tax Tax base Total tax and Notes on TTCR mandatory (number) Payments rate contribution contribution rate (% of profit) Corporate 1.0 online 48.0 25% taxable profits 26.23 income tax Employment 1.0 online 124.5 4.5% gross salaries 5.13 taxes Property tax 1.0 online 1.2% property value 1.78 Municipal tax 1.0 online 0.5% capital 0.84 Vehicle license 1.0 fixed rate 3 UTM 0.02 tax Value added tax 1.0 online 123.5 19% value added 0.00 not included (VAT) Municipal tax on 0.0 online and jointly fixed fee 0.00 small amount cleanliness Fuel tax 1.0 included in the 0.00 price of fuel Employee paid - 0.0 online and jointly 19.1% gross salaries 0.00 withheld Social security contributions Totals 7 296 34.0 Page 43 Doing Business 2020 Chile Details – Paying Taxes in Chile – Tax by Type Taxes by type Answer Profit tax (% of profit) 26.2 Labor tax and contributions (% of profit) 5.1 Other taxes (% of profit) 2.6 Page 44 Doing Business 2020 Chile Details – Paying Taxes in Chile – Measure of Quality Answer Score Postfiling index (0-100) 57.0 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? Yes Restrictions on VAT refund process none Percentage of cases exposed to a VAT audit (%) 50% - 74% Is there a mandatory carry forward period? Yes Time to comply with VAT refund (hours) 26.0 48.0 Time to obtain VAT refund (weeks) 38.0 33.3 Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 0% - 24% Time to comply with a corporate income tax correction (hours) 30.5 46.8 Time to complete a corporate income tax correction (weeks) No tax audit per case 100 study scenario Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction. N/A = Not applicable. Page 45 Doing Business 2020 Chile Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: • Obtaining, preparing and submitting documents during transport, clearance, inspections and port or border handling in Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are recorded as origin economy 22×24=528 hours). If customs clearance takes 7.5 hours, the data are recorded as is. Alternatively, • Obtaining, preparing and submitting documents required by suppose documents are submitted to a customs agency at 8:00a.m., are processed overnight and destination economy and any transit economies can be picked up at 8:00a.m. the next day. The time for customs clearance would be recorded as 24 hours because the actual procedure took 24 hours. • Covers all documents required by law and in practice, including electronic submissions of information Cost: Insurance cost and informal payments for which no receipt is issued are excluded from the Border compliance costs recorded. Costs are reported in U.S. dollars. Contributors are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. • Customs clearance and inspections Contributors are private sector experts in international trade logistics and are informed about exchange rates. • Inspections by other agencies (if applied to more than 20% of shipments) Assumptions of the case study: • Handling and inspections that take place at the economy’s port - For all 190 economies covered by Doing Business, it is assumed a shipment is in a warehouse in or border the largest business city of the exporting economy and travels to a warehouse in the largest business city of the importing economy. Domestic transport - It is assumed each economy imports 15 metric tons of containerized auto parts (HS 8708) from • Loading or unloading of the shipment at the warehouse or its natural import partner—the economy from which it imports the largest value (price times port/border quantity) of auto parts. It is assumed each economy exports the product of its comparative advantage (defined by the largest export value) to its natural export partner—the economy that is • Transport between warehouse and port/border the largest purchaser of this product. Shipment value is assumed to be $50,000. • Traffic delays and road police checks while shipment is en - The mode of transport is the one most widely used for the chosen export or import product and route the trading partner, as is the seaport or land border crossing. - All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process. - A port or border is a place (seaport or land border crossing) where merchandise can enter or leave an economy. - Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities. Page 46 Doing Business 2020 Chile Trading across Borders - Chile Indicator Chile OECD high income Best Regulatory Performance Time to export: Border compliance (hours) 60 12.7 1 (19 Economies) Cost to export: Border compliance (USD) 290 136.8 0 (19 Economies) Time to export: Documentary compliance (hours) 24 2.3 1 (26 Economies) Cost to export: Documentary compliance (USD) 50 33.4 0 (20 Economies) Time to import: Border compliance (hours) 54 8.5 1 (25 Economies) Cost to import: Border compliance (USD) 290 98.1 0 (28 Economies) Time to import: Documentary compliance (hours) 36 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 50 23.5 0 (30 Economies) Figure – Trading across Borders in Chile – Score 62.9 72.6 86.4 87.5 81.0 75.8 85.4 92.9 Time Cost Time Cost Time Cost Time Cost to to to to to to to to export: export: export: export: import: import: import: import: Border Border Documentary Documentary Border Border Documentary Documentary compliance compliance compliance compliance compliance compliance compliance compliance Figure – Trading across Borders in Chile and comparator economies – Ranking and Score DB 2020 Trading Across Borders Score 0 100 94.3: Regional Average (OECD high income) 80.6: Chile (Rank: 73) 71.3: Peru (Rank: 102) 69.9: Brazil (Rank: 108) 67.1: Argentina (Rank: 119) 65.1: Paraguay (Rank: 128) Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import. Page 47 Doing Business 2020 Chile Figure – Trading across Borders in Chile – Time and Cost Time (hours) Cost (USD) 70 350 60 290 290 60 54 300 Time (hours) 50 250 Cost (USD) 40 36 200 30 24 150 20 100 50 50 10 50 0 0 Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance Page 48 Doing Business 2020 Chile Details – Trading across Borders in Chile Characteristics Export Import Product HS 74 : Copper and articles thereof HS 8708: Parts and accessories of motor vehicles Trade partner China United States Border San Antonio port San Antonio port Distance (km) 121 121 Domestic transport time (hours) 9 9 Domestic transport cost (USD) 345 345 Details – Trading across Borders in Chile – Components of Border Compliance Time to Complete (hours) Associated Costs (USD) Export: Clearance and inspections required by 2.5 100.0 customs authorities Export: Clearance and inspections required by 0.0 0.0 agencies other than customs Export: Port or border handling 60.0 190.0 Import: Clearance and inspections required by 2.5 100.0 customs authorities Import: Clearance and inspections required by 0.0 0.0 agencies other than customs Import: Port or border handling 54.0 190.0 Page 49 Doing Business 2020 Chile Details – Trading across Borders in Chile – Trade Documents Export Import Bill of lading Bill of lading Certificate of origin Certificate of origin Commercial invoice Commercial invoice Customs Export Declaration Customs Import Declaration Packing list Packing list SOLAS certificate Tax Certificate Terminal Handling receipt SOLAS Certificate Page 50 Doing Business 2020 Chile Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the courts The dispute in the case study involves the breach of a sales contract between two domestic (calendar days) businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt enforcement. • Time to file and serve the case • Time for trial and to obtain the judgment To make the data on the time and comparable across economies, several assumptions about the case are used: • Time to enforce the judgment - The dispute concerns a lawful transaction between two businesses (Seller and Buyer), both Cost required to enforce a contract through the courts (% of located in the economy’s largest business city. For 11 economies the data are also collected for the claim value) second largest business city. - The Buyer orders custom-made furniture, then fails to pay alleging that the goods are not of • Average attorney fees adequate quality. - The value of the dispute is 200% of the income per capita or the equivalent in local currency of • Court costs USD 5,000, whichever is greater. • Enforcement costs - The Seller sues the Buyer before the court with jurisdiction over commercial cases worth 200% of income per capita or $5,000 whichever is greater. Quality of judicial processes index (0-18) - The Seller requests the pretrial attachment of the defendant’s movable assets to secure the • Court structure and proceedings (-1-5) claim. - The claim is disputed on the merits because of Buyer’s allegation that the quality of the goods • Case management (0-6) was not adequate. • Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. - The Seller enforces the judgment through a public sale of the Buyer’s movable assets. • Alternative dispute resolution (0-3) Page 51 Doing Business 2020 Chile Enforcing Contracts - Chile Standardized Case Claim value CLP 19,136,394 Court name Santiago Civil Court City Covered Santiago Indicator Chile OECD high income Best Regulatory Performance Time (days) 519 589.6 120 (Singapore) Cost (% of claim value) 25.6 21.5 0.1 (Bhutan) Quality of judicial processes index (0-18) 10.0 11.7 None in 2018/19 Figure – Enforcing Contracts in Chile – Score 67.3 71.3 55.6 Time Cost Quality of judicial processes index Figure – Enforcing Contracts in Chile and comparator economies – Ranking and Score DB 2020 Enforcing Contracts Score 0 100 67.8: Regional Average (OECD high income) 64.7: Chile (Rank: 54) 64.1: Brazil (Rank: 58) 61.6: Paraguay (Rank: 72) 59.1: Peru (Rank: 83) 57.5: Argentina (Rank: 97) Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators. Page 52 Doing Business 2020 Chile Figure – Enforcing Contracts in Chile – Time and Cost Time (days) Cost (% of claim value) 1200 41.2 45 Cost (% of claim value) 995 40 1000 35 801 30.0 Time (days) 800 30 25.6 22.5 22.0 589.6 21.5 606 25 600 519 478 20 400 15 10 200 5 0 0 Argentina Brazil Chile OECD Paraguay Peru high income Page 53 Doing Business 2020 Chile Figure – Enforcing Contracts in Chile and comparator economies – Measure of Quality Chile 1.5 3.5 2 3 Argentina 2 4 2 4.5 Brazil 3 3 3 4.1 Paraguay 2.5 3.5 1.5 3 Peru 2.5 2.5 0 4.5 OECD high income 2.5 3.2 2.4 3.6 0 2 4 6 8 10 12 14 Sub-Indicator Score Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5) Details – Enforcing Contracts in Chile Indicator Time (days) 519 Filing and service 69 Trial and judgment 270 Enforcement of judgment 180 Cost (% of claim value) 25.6 Attorney fees 15 Court fees 5 Enforcement fees 5.6 Quality of judicial processes index (0-18) 10.0 Court structure and proceedings (-1-5) 3.0 Case management (0-6) 3.5 Court automation (0-4) 2.0 Alternative dispute resolution (0-3) 1.5 Page 54 Doing Business 2020 Chile Details – Enforcing Contracts in Chile – Measure of Quality Answer Score Quality of judicial processes index (0-18) 10.0 Court structure and proceedings (-1-5) 3.0 1. Is there a court or division of a court dedicated solely to hearing commercial cases? No 0.0 2. Small claims court 1.0 2.a. Is there a small claims court or a fast-track procedure for small claims? Yes 2.b. If yes, is self-representation allowed? No 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? Yes, automatic 1.0 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 3.5 1. Time standards 1.0 1.a. Are there laws setting overall time standards for key court events in a civil case? Yes 1.b. If yes, are the time standards set for at least three court events? Yes 1.c. Are these time standards respected in more than 50% of cases? Yes 2. Adjournments 0.5 2.a. Does the law regulate the maximum number of adjournments that can be granted? Yes 2.b. Are adjournments limited to unforeseen and exceptional circumstances? No 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? Yes 3. Can two of the following four reports be generated about the competent court: (i) time to disposition report; (ii) No 0.0 clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the competent court? No 0.0 5. Are there any electronic case management tools in place within the competent court for use by judges? Yes 1.0 6. Are there any electronic case management tools in place within the competent court for use by lawyers? Yes 1.0 Court automation (0-4) 2.0 1. Can the initial complaint be filed electronically through a dedicated platform within the competent court? Yes 1.0 2. Is it possible to carry out service of process electronically for claims filed before the competent court? No 0.0 3. Can court fees be paid electronically within the competent court? No 0.0 4. Publication of judgments 1.0 4.a Are judgments rendered in commercial cases at all levels made available to the general public Yes through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme court level made Yes available to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 1.5 1. Arbitration 1.5 1.a. Is domestic commercial arbitration governed by a consolidated law or consolidated chapter or Yes section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public order or public policy— No that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes Page 55 Doing Business 2020 Chile 2. Mediation/Conciliation 0.0 2.a. Is voluntary mediation or conciliation available? No 2.b. Are mediation, conciliation or both governed by a consolidated law or consolidated chapter or n.a. section of the applicable code of civil procedure encompassing substantially all their aspects (for example, definition, aim and scope of application, desig 2.c. Are there financial incentives for parties to attempt mediation or conciliation (i.e., if mediation or n.a. conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 56 Doing Business 2020 Chile Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used: • Measured in calendar years • Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties. Cost required to recover debt (% of debtor’s estate) - The value of the hotel is 100% of the income per capita or the equivalent in local currency of USD 200,000, whichever is greater. • Measured as percentage of estate value - The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s real estate. • Court fees The hotel cannot pay back the loan, but makes enough money to operate otherwise. • Fees of insolvency administrators In addition, Doing Business evaluates the quality of legal framework applicable to judicial • Lawyers’ fees liquidation and reorganization proceedings and the extent to which best insolvency practices have • Assessors’ and auctioneers’ fees been implemented in each economy covered. • Other related fees Outcome • Whether business continues operating as a going concern or business assets are sold piecemeal Recovery rate for creditors • Measures the cents on the dollar recovered by secured creditors • Outcome for the business (survival or not) determines the maximum value that can be recovered • Official costs of the insolvency proceedings are deducted • Depreciation of furniture is taken into account • Present value of debt recovered Strength of insolvency framework index (0- 16) • Sum of the scores of four component indices: • Commencement of proceedings index (0-3) • Management of debtor’s assets index (0-6) • Reorganization proceedings index (0-3) • Creditor participation index (0-4) Page 57 Doing Business 2020 Chile Resolving Insolvency - Chile Indicator Chile OECD high income Best Regulatory Performance Recovery rate (cents on the dollar) 41.9 70.2 92.9 (Norway) Time (years) 2.0 1.7 0.4 (Ireland) Cost (% of estate) 14.5 9.3 1.0 (Norway) Outcome (0 as piecemeal sale and 1 as going concern) 0 .. .. Strength of insolvency framework index (0-16) 12.0 11.9 None in 2018/19 Figure – Resolving Insolvency in Chile – Score 45.1 75.0 Recovery rate Strength of insolvency framework index Figure – Resolving Insolvency in Chile and comparator economies – Ranking and Score DB 2020 Resolving Insolvency Score 0 100 74.9: Regional Average (OECD high income) 60.1: Chile (Rank: 53) 50.4: Brazil (Rank: 77) 46.6: Peru (Rank: 90) 42.1: Paraguay (Rank: 105) 40.0: Argentina (Rank: 111) Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index. Page 58 Doing Business 2020 Chile Figure – Resolving Insolvency in Chile – Time and Cost Time (years) Cost (% of estate) 4.5 16.5 18 4.0 3.9 4 14.5 16 Cost (% of estate) 3.5 3.1 14 12.0 Time (years) 3 12 2.4 9.3 9.0 2.5 10 2.0 2 1.7 7.0 8 1.5 6 1 4 0.5 2 0 0 Argentina Brazil Chile OECD Paraguay Peru high income Page 59 Doing Business 2020 Chile Figure – Resolving Insolvency in Chile and comparator economies – Measure of Quality Chile 4.5 2.5 3 2 Argentina 4 2.5 1 2 Brazil 5.5 2.5 3 2 Paraguay 4 2.5 2 1 Peru 3.5 2.5 3 0.5 OECD high income 5.3 2.8 2.1 1.9 0 2 4 6 8 10 12 14 Sub-Indicator Score Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3) Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Figure – Resolving Insolvency in Chile and comparator economies – Recovery Rate Recovery rate(cents on the dollar) 80 70.2 70 60 50 41.9 40 31.3 30 23.0 19.2 18.2 20 10 0 Chile Argentina Brazil Paraguay Peru OECD high income Page 60 Doing Business 2020 Chile Details – Resolving Insolvency in Chile Indicator Answer Score Proceeding liquidation (after an Mirage would attempt a reorganization proceeding, which is going to involve in-court negotiations with creditors of attempt at different classes, including secured creditors. It is likely that an agreement is not reached, so that the reorganization reorganization) proceeding will be converted into a liquidation proceeding. At this stage creditors may choose to carry out a simplified judicial liquidation proceeding or an ordinary judicial liquidation which could include the sale of movable and immovable property. Outcome piecemeal sale Once the liquidation proceeding starts, the trustee will be in charge of administration of the debtor’s assets. The trustee will sell Mirage’s assets separately and distribute the proceeds of the sale among the creditors based on the priorities established. Time (in years) 2.0 The Reorganization procedure is relatively fast, since in a few months (3 to 5) the reorganization agreement is approved or rejected and, generally, before the debtor fails to do so, it is passed to the liquidation stage. In comparison, the liquidation procedure takes longer than the reorganization process, since the ordinary credit verification period is longer (30 business days), after which a period of recognition and objection of verified credits is established, several Boards of Creditors And subsequently the sale of the property (6 to 18 months). Finally, it must be taken into account that the processing time will vary from court to court, as the workload between them is not uniform. Cost (% of estate) 14.5 The costs associated with the reorganization proceeding which is then converted into liquidation, like in the case of Mirage, would amount to approximately 14.5% of the value of the Mirage’s estate, according to the following breakdown: - Attorney’s fees: attorneys could charge a maximum of 8% (according to the fee schedule of the Bar of Valparaiso). - Fees of insolvency administrators: 6% is a fixed rate (article 34 of the Commercial Code). However, in practice the trustees could obtain around 10% of the value of the debtor’s estate. - Costs of notification: The Official Journal has a fixed cost that could be around 0.5% including the additional costs related to publication. Recovery rate 41.9 (cents on the dollar) Page 61 Doing Business 2020 Chile Details – Resolving Insolvency in Chile – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 12.0 Commencement of proceedings index (0-3) 2.5 What procedures are available to a DEBTOR when commencing insolvency proceedings? (a) Debtor may file for 1.0 both liquidation and reorganization Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (b) Yes, but a creditor 0.5 may file for liquidation only What basis for commencement of the insolvency proceedings is allowed under the insolvency framework? (a) (a) Debtor is 1.0 Debtor is generally unable to pay its debts as they mature (b) The value of debtor's liabilities exceeds the value generally unable to of its assets pay its debts as they mature Management of debtor's assets index (0-6) 4.5 Does the insolvency framework allow the continuation of contracts supplying essential goods and services to the Yes 1.0 debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome contracts? No 0.0 Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit after commencement of Yes 1.0 insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (a) Yes over all pre- 0.5 commencement creditors, secured or unsecured Reorganization proceedings index (0-3) 2.0 Which creditors vote on the proposed reorganization plan? (c) Other 1.0 Does the insolvency framework require that dissenting creditors in reorganization receive at least as much as No 0.0 what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, does each class vote Yes 1.0 separately and are creditors in the same class treated equally? Creditor participation index (0-4) 3.0 Does the insolvency framework require approval by the creditors for selection or appointment of the insolvency Yes 1.0 representative? Does the insolvency framework require approval by the creditors for sale of substantial assets of the debtor? Yes 1.0 Does the insolvency framework provide that a creditor has the right to request information from the insolvency No 0.0 representative? Does the insolvency framework provide that a creditor has the right to object to decisions accepting or rejecting Yes 1.0 creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Page 62 Doing Business 2020 Chile Employing Workers Doing Business presents detailed data for the employing workers indicators on the Doing Business website (http://www.doingbusiness.org). The study does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions about the worker and the (i) whether fixed-term contracts are prohibited for permanent business are used. tasks; (ii) maximum cumulative duration of fixed-term contracts; (iii) length of the maximum probationary period; (iv) minimum The worker: wage;(v) ratio of minimum wage to the average value added per - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. worker. - Is a full-time employee. - Is not a member of the labor union, unless membership is mandatory. Working hours (i) maximum number of working days allowed per week; (ii) The business: premiums for work: at night, on a weekly rest day and overtime; - Is a limited liability company (or the equivalent in the economy). (iii) whether there are restrictions on work at night, work on a - Operates a supermarket or grocery store in the economy’s largest business city. For 11 weekly rest day and for overtime work; (iv) length of paid annual economies the data are also collected for the second largest business city. leave. - Has 60 employees. - Is subject to collective bargaining agreements if such agreements cover more than 50% of the Redundancy rules food retail sector and they apply even to firms that are not party to them. (i) whether redundancy can be basis for terminating workers; (ii) - Abides by every law and regulation but does not grant workers more benefits than those whether employer needs to notify and/or get approval from third mandated by law, regulation or (if applicable) collective bargaining agreements. party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether the law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments, and (iii) penalties due when terminating a redundant worker. Data on the availability of unemployment protection for a worker with one year of employment is also collected. Page 63 Doing Business 2020 Chile Employing Workers - Chile Details – Employing Workers in Chile Answer Hiring Fixed-term contracts prohibited for permanent tasks? No Maximum length of a single fixed-term contract (months) 12.0 Maximum length of fixed-term contracts, including renewals (months) 12.0 Minimum wage applicable to the worker assumed in the case study (US$/month) 450.9 Ratio of minimum wage to value added per worker 0.3 Maximum length of probationary period (months) n.a. Working hours Standard workday 9.0 Maximum number of working days per week 6.0 Premium for night work (% of hourly pay) 0.0 Premium for work on weekly rest day (% of hourly pay) 30.0 Premium for overtime work (% of hourly pay) 50.0 Restrictions on night work? No Restrictions on weekly holiday? No Restrictions on overtime work? No Paid annual leave for a worker with 1 year of tenure (working days) 15.0 Paid annual leave for a worker with 5 years of tenure (working days) 15.0 Paid annual leave for a worker with 10 years of tenure (working days) 15.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 15.0 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? Yes Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? Yes Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? No Priority rules for redundancies? No Priority rules for reemployment? No Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 4.3 Notice period for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 4.3 Notice period for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 4.3 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 4.3 Severance pay for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 4.3 Severance pay for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 21.7 Page 64 Doing Business 2020 Chile Severance pay for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 43.3 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 23.1 Unemployment protection after one year of employment? Yes Page 65 Doing Business 2020 Chile Business Reforms in Chile From May 2, 2018 to May 1, 2019, 115 economies implemented 294 business regulatory reforms across the 10 areas measured by Doing Business. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008. =Doing Business reform making it easier to do business. = Change making it more difficult to do business. DB2020 Starting a Business: Chile made starting a business easier by enabling online registration of closed corporations. DB2019 Starting a Business: Chile made starting a business easier by replacing the requirement to print and present sealed accounting books and invoices to the Internal Revenue Service with an electronic system. Enforcing Contracts: Chile made enforcing contracts easier by introducing an e-system that allows plaintiffs to file the initial complaint electronically. DB2016 Paying Taxes: Chile made paying taxes more costly for companies by increasing the corporate income tax rate. Resolving Insolvency: Chile made resolving insolvency easier by clarifying and simplifying provisions on liquidation and reorganization, introducing provisions to facilitate the continuation of the debtor’s business during insolvency, establishing a public office responsible for the general administration of insolvency proceedings and creating specialized insolvency courts. DB2012 Starting a Business: Chile made business start-up easier by starting to provide an immediate temporary operating license to new companies, eliminating the requirement for an inspection of premises by the tax authority before new companies can begin operations and allowing free online publication of the notice of a company’s creation. Getting Credit: Chile strengthened its secured transactions system by implementing a unified collateral registry and a new legal framework for nonpossessory security interests. Trading across Borders: Chile made trading across borders faster by implementing an online electronic data interchange system for customs operations. DB2011 Starting a Business: Chile made business start-up easier by introducing an online system for registration and for filing the request for publication. Protecting Minority Investors: An amendment to Chile’s securities law strengthened investor protections by requiring greater corporate disclosure and regulating the approval of transactions between interested parties. Page 66 Doing Business 2020 Chile Page 67