Requirements for Foreign Employees to Work
In companies with 25 or more employees, at least 85% of those hired must be Chilean citizens. To determine this ratio, the law excludes technicians. For these purposes the law deems the following persons as Chileans: (i) foreigners whose spouse or civil partner or whose children are Chilean, including widows or widowers of a Chilean spouse; and (ii) foreigners who have resided in the country for more than five years, not considering accidental absences.
National Employees: remunerations of employees are subject to a monthly Second Category Income tax, under a progressive tax scale to be deducted at source by the employer. This tax is payable by the company to the Treasury within the first 12 days of the month following that of the deduction. Currently, the tax brackets range from exemption to a 40% tax rate.
Foreign Employees: foreign employees rendering services in Chile and also domiciled or residing in Chile are likewise subject to the Second Category tax. As a general rule, foreigners neither domiciled nor residing in Chile and working in Chile are subject to a flat 35% Additional Income tax to be deducted by the company that employs them in Chile upon payment of the salary or fee, and the tax is payable to the Treasury within the first 12 days of the month following that in which the tax was deducted.
Does a Foreign Employer need to Establish or Work through a Local Entity to Hire an Employee?
Foreign employers do not need to establish a local hiring entity. However, when services are rendered in Chile to a foreign employer under labour subordination, the latter must designate a representative in Chile (typically a payroll provider) to sign a local employment contract on its behalf, as well as to pay salaries and social security contributions.
Limitations on Background Checks
In Chile, employers are not allowed to condition a hiring on economic records (exceptions apply) and cannot request pregnancy certificates nor HIV checks.
Restrictions on Application/Interview Questions
Distinctions and preferences are forbidden if based on: race, color, gender, maternity, religion, politic opinion, language, social origin, nationality, gender identity, sexual orientation, or union affiliation. An application cannot be rejected because of any of the above conditions.