Author: Jaime Carey, Managing Partner at Carey.
Contact: email@example.com / https://www.linkedin.com/in/jaime-carey-t-8259825b/
Overview of legal measures as of May 7th, as response to the coronavirus.
Chile is a unitary and democratic republic:
Presidential regime (4 years).
Independent Congress (2 houses: senators and representatives).
The country’s President, who took office in March 11th, 2018, is Mr. Sebastián Piñera, an economist and business man, who was already President from 2010 until 2014.
Major national consensus (free market, free trade, democracy, etc.).
Institutional, political & legal stability.
Consistent and effective public policies.
Protection of Property Rights and Foreign Investment (constitutional, statutory and judicial).
Rule of Law – First world standards according to World Bank rankings
1. INTERVENTIONS AND RESTRICTIONS
1.1 Legal basis
Based on its legal competences to take measures to cope with a pandemic, the Republic of Chile has adopted Extraordinary Measures to Combat the Coronavirus (COVID-19). The President of Chile declared a State of Constitutional Exception and Catastrophe in the entire country.
State of Catastrophe
State of catastrophe: Since June 17th, a state of catastrophe was extended by President Piñera for 90 more days which established a total restriction of movement in the national territory from 22:00 hrs. to 5:00 hrs., with the purpose of reducing movements and to encourage citizens to stay mostly at home.
Starting Wednesday, March 18th, the entry of non-resident foreigners has been banned. Therefore, the Chilean Consulates network in the world will suspend routine immigrant and nonimmigrant visa services, starting March 18th until further notice. Such measure is taken considering that, from the moment of the visa has been granted, it takes 90 days to enter Chile, and given the sanitary emergency, it is not possible to determine a date for reopening the Chilean borders.
Consulates are currently operational
The Chilean consulates network is operative. In countries where health authority measures prevent the opening of offices and businesses, the emergency telephone numbers of each consulate can be reached.
Since March 18, all Chile’s land, sea and air borders have been closed to foreign citizens. To ensure a normal supply of goods and services, this measure will not affect the entry and exit of cargo and the associated personnel.
Chileans and foreign residents in Chile coming from high-risk locations can enter the country subject to a health check and, if coming from some of the countries with major outbreaks of Covid-19, such as Germany, South Korea, China, Spain, France, Iran, Italy and Japan, a mandatory 14-day quarantine.
Foreign citizens will be allowed to leave the country.
This is in addition to a ban on cruise ships docking at Chilean ports (until September 30) and strict border sanitary controls.
As a result of the increasing escalation in the outbreak of the coronavirus (COVID-19), the Chilean government has taken extraordinary measures instituting travel restrictions on foreign nationals traveling to Chile.
On March 16, the Chilean government declared that Stage 4 of COVID-19 has been reached in Chile which in accordance with the World Health Organization (WHO) protocol, corresponds with viral circulation and community-level outbreaks, implying widespread virus propagation.
Through a presidential messaAs a result of the increasing escalation in the outbreak of the coronavirus (COVID-19), the Chilean government has taken extraordinary measures instituting travel restrictions on foreign nationals traveling to Chile.
On March 16, the Chilean government declared that Stage 4 of COVID-19 has been reached in Chile which in accordance with the World Health Organization (WHO) protocol, corresponds with viral circulation and community-level outbreaks, implying widespread virus propagation.
Through a presidential message, Chilean President Sebastián Piñera announced, among others, the extraordinary measures described as follows.
Effective from March 18, Chile will close its land, maritime, and air borders to foreign nationals. It is understood that this takes effect as of midnight March 18.
Chilean nationals and foreign nationals with Chilean resident status, in transit from countries with a high-level risk designation (currently, Iran, People’s Republic of China, Germany, France, Spain, Italy, South Korea, and Japan), will be able to enter Chile but will have to undergo screening procedures by the Sanitary Customs Office and will be subject to a mandatory fourteen (14) day quarantine. Non-compliance may result in criminal prosecution and administrative sanctions, such as prison, monetary fines, and deportation.
Foreign nationals with an ongoing in-country Ministerial Visa request and foreign nationals with expired residence visas who still do not have an approved and valid proof of visa in progress or proof or permanent residence in progress certificate, cannot re-enter the country until their visa / residence in progress certificates are issued or extended, in the event that they have expired.
To secure a supply of goods and services, the closing of borders policy will not affect cargo transportation services, nor will it affect the personnel associated with that activity.
Heads of public agencies/services can modify public-service hours and will have authority to decree remote working processes for public officials.
Administrative measures will be enacted to secure the continuity of essential public services. The government announced that Chilean citizens and foreign nationals in possession of temporary or permanent residency visas with soon-to-be-expired Chilean ID Cards will benefit from a one (1) year validity extension of their current Chilean ID Cards. The specific procedure is yet to be confirmed. However, this extension will only apply to Chilean ID Cards. Foreign nationals with temporary residence visas close to their expiration date will still need to apply for a visa extension or a permanent residency request within the normal legal period of applications.
The Immigration Department will develop an online system that will allow foreign nationals with approved temporary residence visas to download a provisional electronic visa stamp with a six (6) month validity period. Employees in this situation will be obliged to request the physical visa stamp in their passports before expiration.
Exempt resolution N°2.606 which sets forth provisional extension measure of the period indicated, given the sanitary emergency due to the Covid-19 outbreak
On June 8, 2020, exempt resolution N°2.606 of the Ministry of Interior and Public Security entered into effect. The same sets forth provisional extension measures from 30 to 180 days in order to request a new visa due to change of employer.
The abovementioned resolution, temporarily modifies the period established under article 129 N°6 of supreme decree N°597, of 1984, Approved by the New Immigration Regulation, which establishes that requests for change of visa or Permanent Residence, in those cases set forth under article 39, second paragraph, of the same legal body, may be filed within the following 30 days counted from the termination of the corresponding employment. The following requirements must be met in order to be eligible to this extension measure:
Foreign employees must be the main holders of a valid work contract visa.
The employment contract which was terminated, must be the one which served as a basis to request the aforementioned visa.
That the termination of services was produced while the Exceptional State of Catastrophic Emergency declared by supreme decree N°104 of March 18, 2020 of the Ministry of Interior and Public Security is in force.
Please bear in mind that having expired the 180 day period without having requested a new work contract visa or permanent residence, whichever the case, it will be understood that the prior visa expired in light of article 39, second paragraph of supreme decree N°597 of 1984 of the Ministry of Interior Approved by the New Immigration Regulation, without further formality.
This measure aims to facilitate labor reinsertion of those looking for employment amidst the actual economic and social crisis which Chile and the whole world is facing, due to the coronavirus pandemic.
1.4 Export control
Measures taken by the National Customs Service regarding Covid-19
March 31, 2020
Considering the Covid-19 pandemic and Chile's declaration of a State of Disaster, the National Customs Service (Servicio Nacional de Aduanas, "SNA") has issued certain regulations to facilitate foreign and domestic trade operations electronically and to protect the health of all people involved in its operations. Below you will find a description of the regulations currently in force and effect:
A. Circular Letter No. 67 dated February 11, 2020: instructs the Customs Offices and Customs Administrators to refrain, in exceptional cases and after a case-by-case assessment, from carrying out sanctioning procedures for import and export regulatory breaches caused by Covid-19 (https://www.aduana.cl/aduana/site/docs/20200212/20200212172414/oficio_circular_n__67___11_02_2020.pdf);
B. Exempt Resolution No. 1179 dated March 18, 2020: adopts 13 measures that began to apply on March 20, 2020 and will remain in force and effect until the issuance of a well-founded resolution by the National Director to terminate them (https://www.aduana.cl/aduana/site/docs/20200319/20200319112817/resolucion_n_1179_de_18_03_20.pdf and https://www.aduana.cl/se-establecen-medidas-de-facilitacion-del-comercio-exterior-para/aduana/2020-03-19/140021.html):
Authorization, upon request of the customs agent, of physical inspections of the goods (aforo) without the presence of customs agents;
Authorization for the notification of responses to requests from customs agents, to be made through the e-mails registered with the SNA;
Authorization for Bill of Lading (B/L) exchanges and its corrections to be sent to customs agents by the issuer electronically. These scanned documents must be signed or stamped by the personnel of the customs agent duly authorized before the SNA. The latter, subject to the condition that within 30 calendar days from receipt of these documents, the dispatcher collects the original B/Ls and attaches them to the respective folder;
Authorization to grant dispatch power of attorney (“PoA”) to the respective customs agent by e-mail, individualizing the dispatches and the PoA and its contents. The principal/representative shall ratify this PoA pursuant to any of the means indicated in Article 197 of the Customs Act (i.e. special PoA granted by public deed or other means authorized by the National Director of SNA; or endorsement of B/L, consignment notes, air waybills or other document that takes their place), within 15 days since this Exempt Resolution No. 1179 losses its effectiveness (which should be informed in due time by the SNA);
Authorization for remote work of customs agents and their assistants, and being understood that such places constitute their offices of habitual performance;
Extension of the validity of customs cards that expire during the validity of this resolution, until September 30, 2020;
Authorization for customs agents to receive by e-mail from consignors, consignees and other participants in the logistics chain, the basic documentation required to prepare and submit customs declarations. The latter, notwithstanding that within 30 calendar days after Exempt Res. 1179 losses its effectiveness, the dispatchers must collect the original documents;
Authorization for the Request for Amendment of Customs Document (Solicitud de Modificación de Documento Aduanero, "SMDA") and all supporting documentation to be submitted electronically. The response of approval or rejection shall be informed by e-mail to the sender. Note this authorization does not apply to the refund of duties regulated in paragraph a) of numeral 2.1.4 of Chapter IV of the Payments Manual (i.e. Refunds with Reasoning of the General Comptroller of the Republic);
Authorization for withdrawal of goods from customs warehouses by customs agencies other than those responsible for clearance, through a simple PoA issued by the agent responsible for clearance to the one who will make the withdrawal. The principal must previously authorize or ratify this operation;
Authorization to send the documents of the Legalization of Export Declarations by the customs agent by e-mail;
Authorization for the sending of the documents of the effective arrival of the ship-manifest, by e-mail to the box designated by each Customs Office;
Authorization for the documents regarding the application for issuance of a passenger (i.e. document issued by the SNA authorizing the owner of a vehicle who is a resident of the Regions of Arica and Parinacota, Tarapacá, Aysén and Magallanes, and the Province of Palena, Region of Los Lagos, to take his vehicle to the rest of the country for up to 90 calendar days, to be sent to the SNA by e-mail (https://www.aduana.cl/aduana-prorroga-vigencia-de-pasavantes/aduana/2020-03-24/155723.html); and
Suspend the accounting of the deadlines of passengers, destinations of temporary admission and exit of cars and aircraft, which may expire during the validity of the Exempt Res. No. 1179, until the latter losses it effectiveness.
Additionally, the SNA instructs the Regional Directorates and Customs Administrations to grant facilities to their users and to coordinate with foreign trade operators processing customs procedures electronically.
C. Exempt Resolution No. 1208 dated March, 19 2020: establishes internal management measures in the SNA to be carried out by its officials and the control tasks to be performed by the heads and officials responsible in the context of Covid-19 (document not available on the SNA website. It was requested by means of transparency).
D. Exempt Resolution No. 2262 dated March 20, 2020: establishes a temporary procedure for the import of goods whose FOB value exceeds USD 3,000, through International Express or Express Delivery Companies (Empresas de Envíos de Entrega Rápida o Expreso Internacional, EEER) (https://drive.google.com/file/d/1IeTuyeIsu2ueY0Sjbs8EU8mkzgyIGJ_g/view).
E. Circular Letter No. 120 dated March 26, 2020: clarifies Exempt Res. No. 1179 to specify that e-mails registered with the SNA must be used to make corrections and/or exchange B/L (indicated in letter B. (iii) above), and keep emails stamped and/or signed in the respective folders (https://www.aduana.cl/oficio-circular-n-120-26-03-2020/aduana/2020-03-26/160010.html).
F. Exempt Resolution No. 1313 dated March 26, 2020: establishes a simplified procedure to import critical goods by any means of transportation and shipping company. The determination of which goods correspond to critical goods is determined by the Chilean health authority. It also provides for the application of certain rules included in the "Disaster Contingency Plan" approved by Exempt Resolution No. 3041 dated 26 April 2012 to goods donated on the occasion of a state of disaster to the State, natural or legal persons of public law, foundations or corporations of private law and universities recognized by the State and certified by the Ministry of the Interior (https://www.aduana.cl/aduana/site/docs/20200326/20200326110017/res1313_26_03_20.pdf and https://www.aduana.cl/simplifican-tramites-de-importacion-de-insumos-criticos-para-controlar/aduana/2020-03-26/130457.html).
A reference list of these critical goods and a list of tariff reduction applicable to such critical goods pursuant to trade agreements executed by Chile can be found at the following link: https://www.aduana.cl/listado-referencial-de-clasificacion-arancelaria-de-mercancias-criticas/aduana/2020-03-26/162444.html.
G. Circular Letter No. 121 dated March 26, 2020: repeats and clarifies certain instructions on the processing of certificates of origin to request tariff preferences currently in force and effect (https://www.aduana.cl/aduana/site/docs/20200102/20200102101702/of__circ__121___26_03_2020_sdt.pdf).
H. Circular Letter No. 129 dated April 1, 2020: complements instructions for the customs reimbursements set forth in Exempt Res. No. 5394 dated November 22, 2019. The SNA instructs the Customs Offices and Customs Administrators to send to certain emails the cases of resolutions under which the refund of customs duties proceeds and that have not been made, so that the Chilean Treasury can regularize this situation for the benefit of the taxpayer (https://www.aduana.cl/aduana/site/docs/20200401/20200401155454/oficio_n__129___01_04_2020.pdf).
I. Circular Letter No. 131 dated April 1, 2020: complements Circular Letter No. 121 dated March 26, 2020 mentioned above, informing new measures adopted by certain countries regarding digital certificates of origin and how the SNA shall operate (https://www.aduana.cl/aduana/site/docs/20200102/20200102101702/oficio_circular_131.pdf).
J. Exempt Resolution No. 1377 dated April 1, 2020: modifies Exempt Resolution No. 1179 mentioned above, including a new article 2 that allows the submission of applications to the SNA, by individuals and State Administration bodies, by e-mail (firstname.lastname@example.org). The measure will remain in force and effect until the issuance of a resolution by the National Director by means of which losses it effectiveness (https://www.aduana.cl/aduana/site/docs/20200103/20200103160956/1377_2020_oficina_de_partes.pdf).
K. Exempt Resolution No. 1409 dated April 3, 2020: authorizes Empresa Nacional del Petróleo (ENAP) to carry out measurements of crude oil and derivative tanks without the physical presence of inspection agencies, which will perform discharge calculations remotely. It also orders that a copy of this resolution must be included in the corresponding dispatch folders and that the Declarations of Entry (DIN) must include an observation named "Contingency COVID-19". The instructions of this Exempt Resolution are effective as of April 3, 2020 (https://www.aduana.cl/resolucion-exenta-1409-03-04-2020/aduana/2020-04-03/083826.html).
L. Circular Letter No. 134 dated April 8, 2020: informs on the application of Exempt Resolution No. 2415 dated February 20, 2014 issued by the Undersecretary of the Interior (S) to the goods donated on the occasion of the state of disaster, whose import procedure is temporarily regulated by the Exempt Resolution No. 1313 abovementioned. The circular letter would include certain pages of the Exempt Res. of the Undersecretary of the Interior (S) (https://www.aduana.cl/oficio-circular-n-134-08-04-2020/aduana/2020-04-08/111153.html).
M. Circular Letter No. 135 dated April 13, 2020: standardizes the instructions for customs processes of donations in a state of disaster (https://www.aduana.cl/oficio-circular-n-135-13-04-2020/aduana/2020-04-13/141533.html).
N. Circular Letter No. 139 dated April 16, 2020: complements Circular Letter No. 121 dated March 26, 2020 and Circular Letter No. 131 dated April 1, 2020 mentioned above, informing new measures adopted by certain countries regarding digital certificates of origin and how the SNA shall operate (https://www.aduana.cl/aduana/site/docs/20200102/20200102101702/of_circ_139_de_16_04_2020.pdf).
Ñ. Exempt Resolution No. 1156 dated April 17, 2020: amends Exempt Resolution No. 1179. Particularly: (a) complements number 3 of Article 1 (i.e. Bill of Lading (B/L) exchanges and its corrections are sent electronically); and (b) provides special instructions with respect to the breaches of the particular warehouse regime (regimen de alamacén particular) derived from Covid-19, which will be considered as force majeure (caso fortuito) –SNA’s previous analysis-, and that the abandonment presumption of article 136 and subsequent articles of the Customs Ordinance may not be applied, or, if already applied, exempt or reduce the additional charge of article 154 of the same Ordinance (https://www.aduana.cl/aduana/site/docs/20200103/20200103160956/res1556.pdf).
O. Exempt Resolution No. 1559 dated April 17, 2020: establishes instructions for the deferred payment of Value Added Tax ("VAT") by certain importers as provided by Supreme Decree No. 420 of the Ministry of Finance published in the Official Gazette on April 1, 2020 (i.e. (i) micro, small and medium sized companies under article 14 letter D of the Income Tax Law, who may defer payment of VAT in 12 payments beginning in July 2020; and (ii) VAT payers whose annual income exceeds 75,000 Unidades de Fomento ("UF") and does not exceed 350,000 UF, who may defer payment of VAT in 6 payments beginning in July 2020). The SNA provides that the Chilean Internal Revenue Service must previously inform the SNA the list of taxpayers who will be eligible for this benefit, and that this form of deferred VAT payment may be made for all import declarations, with the sole exception of Import Declarations and Simultaneous Payments (Declaraciones de Importación y Pago Simultáneo, DIPS) from courier companies. Finally, this Resolution states that those importers who have processed an import declaration between April 1 and the date of entry into force of Exempt Res. No. 1559, and who meet the requirements for deferred payment of VAT, may modify their import declaration by means of an SMDA (https://www.aduana.cl/resolucion-exenta-1559-17-04-2020/aduana/2020-04-20/125554.html).
P. Exempt Resolution No. 1628 dated April 23, 2020: modifies Exempt Resolution No. 1179 abovementioned. Particularly, it incorporates a new numeral 14 to Article 1 of such Resolution, to allow the hearings referred to in numeral 126.96.36.199 of Chapter III of the Payments Manual (i.e. SNA procedures regarding fines and charges derived from import operations) to be conducted by videoconference or other equivalent means (https://www.aduana.cl/resolucion-exenta-1628-23-04-2020/aduana/2020-04-23/141258.html); and
Q. Circular Letter No. 144 dated April 23, 2020: complements instructions of the abovementioned Exempt Resolution No. 1559. Particularly, it states that regarding numeral 7 of Exempt Resolution No. 1559, only those import declarations that are unpaid between 1 and 17 April 2020, and whose importer/taxpayer complies with the requirements for deferred payment of VAT, may manually process an SMDA to benefit from the provisions of numeral 4 of Exempt Resolution No. 1559 and send the documents to the mails defined by each Regional Customs Office (https://www.aduana.cl/oficio-circular-n-144-23-04-2020/aduana/2020-04-23/172239.html).
R. Circular Letter No. 155 dated April 30, 2020: complements Circular Letter No. 121 dated March 26, 2020, Circular Letter No. 131 dated April 1, 2020, and Circular Letter No. 139 dated April 16, 2020 mentioned above, informing new measures adopted by certain countries regarding certificates of origin (https://www.aduana.cl/oficio-circular-n-155-30-04-2020/aduana/2020-05-04/132402.html); and
S. Circular Letter No. 167 dated May 19, 2020: complements Circular Letter No. 121 dated March 26, 2020, Circular Letter No. 131 dated April 1, 2020, Circular Letter No. 139 dated April 16, 2020, and Circular Letter No. 155 dated April 30, 2020 mentioned above, informing new measures adopted by certain countries regarding certificates of origin (https://www.aduana.cl/aduana/site/docs/20200102/20200102101702/oficio_circular_167_de_19_05_2020_contingencia.pdf).
T. Exempt Resolution No. 1924 dated May 28, 2020: authorizes Empresa Correos de Chile to redirect its postal shipments from the ports of Valparaiso and San Antonio to the Metropolitan Customs Office (Aduana Metropolitana). The redestination procedure described in the regulation will be transitory, and will enter in force and effect from its publication in the Official Gazette (https://www.aduana.cl/aduana/site/docs/20200103/20200103160956/resol_postal.pdf).
U. Circular Letter No. 174 dated May 29, 2020: informs certain regulations of the Chilean Institute of Public Health (Instituto de Salud Pública, "ISP") for the importation of goods subject to sanitary control. The SNA informs the ISP regulations for the importation of medicines, cosmetics, medical devices, pesticides for sanitary use, diagnostic tests/kits to detect Covid-19, soaps, alcohol gel, masks, etc., for commercial and/or personal use, and whether they require or not a Certificate of Customs Destination (Certificado de Destinación Aduanera, "CDA") -and the authorization/resolution authorizing the Use and Disposal in case of commercial distribution of such goods-, as well as the platforms to be used by the importers (https://www.aduana.cl/oficio-circular-n-174-29-05-2020/aduana/2020-05-29/150918.html).
Import or export of goods
To date, there is no formal resolution issued by the SNA restricting the import of goods into Chile. However, considering the regulations and/or measures adopted by the Chilean health authority, note the SNA could issue particular import regulations related with Covid-19.
The SNA would have adopted the use of masks in the port and air systems. Additionally, there would have been a strengthened control on truckers/transporters entering into Chile after the border closure on March 18, 2020 and the sanitary cordons that have been set up in the country.
On the other hand, please note Exempt Resolution No. 487 dated January 31, 2020, which regulates the submission and conservation of dispatch folders (carpetas de despacho) by customs agents, consignors and consignees with a license to clear, and cabotage and export agents electronically, prior accreditation with the SNA (https://www.aduana.cl/aduana/site/docs/20200103/20200103160956/resol_n_487_31_01_2020.pdf).
This resolution will enter in force and effect on March 31, 2020.
Through Exempt Res. No. 1380 of April 1, 2020, the SNA amended Exempt Res. No. 487 regarding the request and receipt of electronic dispatch folders (EDFs), and the digitization of the backside of documents only if they have content. This Exempt Res. No. 1380 entered into force retroactively on March 31, 2020 (https://www.aduana.cl/aduana/site/docs/20200103/20200103160956/resol_n_1380_01_04_2020_cde.pdf).
In the following link you can access the amended and restated text of the Exempt Res. No. 487 (https://www.aduana.cl/texto-refundido-de-la-res-n-487-del-31-01-2020/aduana/2020-04-03/173253.html).
4. Authorized points and customs operations to be carried out at these points
Please note that Exempt Resolution No. 1276 dated March 24, 2020, modifies Annex I of the Compendium of Customs Regulations regarding "Authorized points and customs operations to be performed before them". In this regard, the SNA updated the kinds of authorized points, the customs operations that can be performed through them and the respective customs office to which each point is subject (https://www.aduana.cl/resolucion-exenta-1276-24-03-2020/aduana/2020-03-24/113523.html).
1.5 Prohibition of crowds
The declared State of Catastrophe will allow for the establishment of a series of measures including the restriction of social gatherings in public spaces, adopting requisitions, and introducing restrictions on property rights if necessary (v.gr. through price-fixing policies), in order to protect the normal distribution of basic goods and services, organize the creation of food (and other goods) reserves, establish quarantines or curfews, decree measures for the protection of public utility services, and limit transit or general freedom of movement of people.
The above measures may be developed progressively in accordance with the evolution of the situation; therefore, new decrees and measures are been informed each day.
The measures described above will complement those previously announced by the government, which include the following:
Isolation of individuals infected with coronavirus (COVID-19), or under suspicion of being infected.
Obligation for individuals to complete a Health Sworn Statement when entering Chile.
School and pre-school closings.
Prohibition for any public gathering with more than two hundred 50 attendants.
The Government sets guidelines for avoiding crowding in wholesale outlets
Today the Government announced measures for avoiding people crowding together in food wholesale and distribution centers, particularly Santiago’s Vega Central market, given that the municipality where it is located, Recoleta, will begin a seven-day quarantine tomorrow.
The decision will also extend to cemeteries, because the authorities are expecting an increase in visitor flow at such locations for Mother’s Day.
The announcement came after it was determined yesterday that the Metropolitan Region municipalities of Cerrillos, Quilicura and Recoleta will begin a quarantine at 10 pm on Tuesday, while the quarantine already in place in the municipality of Santiago will be extended. This is also the case for the urban section of Antofagasta and the municipality of Mejillones.
Curfew and sanitary customs
Government decrees quarantine for all of Greater Santiago: Measure affects 42% of the population of Chile
After announcing 2,660 new confirmed cases of covid-19, the Ministry of Health decreed total quarantine for the 38 communes of the Metropolitan Region that is the Greater Santiago. It is the largest confinement so far in the pandemic. The decision was made in the midst of a critical moment in the advance of the virus in national territory, with an increase in the number of new cases by 60% in a single day. The situation, therefore, worries the health authorities, who described the new measures as "extreme."
Sanitary customs: 113 points have been established along the country to control the spread of the virus between regions. Therefore, these points are located in airports, bus terminals, borders checks and ports.
Sanitary cords: these barriers are implemented depending on the contingency, aiming at refraining people from entering or exiting certain areas. Accordingly, from May 8 onwards, new sanitary barriers have been established at Metropolitana Region, towards Viña del Mar and Valparaiso.
New extension of quarantines
Resolution No. 478 was published on June 23rd in the Official Gazette, which maintains the quarantine in all the communes of the Province of Santiago, in addition to the communes of Lampa, Buin, Padre Hurtado, San Bernardo, Colina, Peñaflor and Puente Alto until June 26th at 10:00 pm. Outside the Metropolitan Region, the quarantine is extended until the same date in the communes of Iquique, Viña del Mar, Valparaíso, San Antonio, Calama, Alto Hospicio, San Felipe, Los Andes, Rancagua, Machalí and the urban areas of the communes of Pozo del Monte, Curicó, Melipilla, San José de Maipo, Curacaví and Til Til.
Also, the communes of Antofagasta, Tocopilla and Mejillones will be incorporated to the quarantined areas from June 23rd at 10:00 pm until July 3rd at 10.00pm. Additionally, the Ministry of Health maintains the sanitary cords and customs previously established.
Mininstry of Public Health provides exceptions to territorial quarantines for essential workers
Resolution No. 477 of the Ministry of Health was published in the Official Gazette on June 20. This Resolution provides that the individuals that are in the circumstances indicated in the Instructions for Movement -set forth in the Ordinary No. 15,346, of June 19, 2020, of the Ministry of the Interior and Public Security- are exempted from the obligation to remain in isolation or quarantine due to living in a certain commune or city. This instructions will be enforceable as of 05.00 on June 22, 2020 and will be published in the following link: https://www.gob.cl/coronavirus/documentos/
The aforementioned provision complements the new article 318 ter of the Criminal Code, also in force since June 20, regarding the workers that are considered to be in quarantine or under compulsory sanitary isolation decreed by the health authority. In this sense, all workers who qualify within the fields that the Instructions have deemed as essential will be exempted from quarantine or sanitary isolation, when the reason for such measure is their place of residence.
Gradual end to confinement begins in Los Ríos and Aysén regions and collective single permit announced for soccer players and high-performance athletes
Health Minister Enrique Paris began his presentation of today’s report by stating, “This is a very special day, because I am completing my first month as Health Minister. I would obviously like to thank the team that has accompanied me over the past 30 days, particularly all of our healthcare workers, from the humblest to all those who are on the front lines, the primary care providers, all of the employees who are contributing to the fight against this pandemic.”
He mentioned that improvement is ongoing and that there has been a significant decrease in the number of positive cases. There has been a 15% drop in new cases over the past 7 days and a 36% drop in new cases over the past 14 days. Furthermore, the rate of positive polymerase chain reaction (PCR) tests, which allows us to measure viral presence, is currently at 15%. This means that the country is fortunately moving towards very low positivity rates. In the two regions in which confinement is ending, Aysén and Los Ríos, Minister Paris said that it is necessary to proceed with as much caution as possible and that ending confinement is voluntary. “Anyone who does not wish to go out is free not to do so. Anyone who does not wish to open their café or restaurant is free not to do so. This is not mandatory – it is voluntary. I believe that it is especially important for older adults to take walks, to get out a little, because it helps strengthen their muscles and calcium depositing in their bones,” Minister Paris noted.
President Piñera presents step-by-step plan:
The President of Chile, Sebastián Piñera, presented this Sunday the “Paso a Paso” (step-by-step) plan, which comprises five phases for moving past the Covid-19 pandemic, progressing from quarantine to advanced opening. The Minister highlighted that during these last five weeks, the daily figures for infected and actively sick people have been decreasing, with 12 regions showing improvements. This makes it possible to move to the step-by-step plan. The first step is quarantine, which implies limited mobility to minimize interaction and the spread of the virus. This phase includes restrictions on personal mobility, exclusive permits for doing essential activities, complying with curfew, physical distancing, sanitary customs and cordons sanitaires, mandatory quarantine for people over 75 and the prohibition on traveling to second homes. This stage also involves a suspension of presential classes, the closure of borders and a ban on events with more than 50 people, the functioning of clubs, cinemas, theaters, pubs, discotheques and gyms, as well as a ban on cafés and restaurants serving the public. The second phase is transition, where the degree of confinement is reduced but an abrupt opening is avoided to minimize the risks of infection. During this phase, quarantine is maintained on Saturdays, Sundays and public holidays, curfew, sanitary customs and cordons sanitaires still need to be complied with, and people over 75 must remain in quarantine but some movement is allowed. This stage also involves a suspension of presential classes, the closure of borders and a ban on events with more than 50 people, the functioning of clubs, cinemas, theaters, pubs, discotheques and gyms, as well as a ban on cafés and restaurants serving the public. Social and recreational activities with more than 10 people are also prohibited. The third step is called preparation. Quarantine is lifted for the general population, with the exception of the at-risk groups. During this phase, curfew, sanitary customs and cordons sanitaires still need to be complied with, and mandatory quarantine continues for all people over 75. However social and recreational activities with up to 50 people will be allowed any day of the week and people can move about except during the hours of curfew. Just like in the previous phase, this stage includes the suspension of presential classes, unless otherwise requested by the mayors, the closure of borders and the ban on the functioning of clubs, cinemas, theaters, pubs discotheques and gyms, as well as a ban on cafés and restaurants serving the public. The fourth phase is initial opening and allows the resumption of certain activities with a lower risk of infection, while minimizing crowds. Curfews, sanitary customs and cordons sanitaires still need to be complied with but movement is permitted and people over 75 can go out once a day. A gradual return to presential classes is authorized, in accordance with Education Ministry planning. Cinemas and theaters can function at 25% capacity and cafés and restaurants can also attend at up to 25% capacity. However, clubs, pubs, discotheques and gyms will remain closed. Social and recreational activities with more than 50 people will also continue to be prohibited. The fifth step is advanced opening, which enables an increase in the number of people in the activities that were allowed in the previous phase, always with the same self-care measures. In this phase people will be permitted to visit second homes and those aged 75 and over will have freedom of movement. A gradual return to presential classes is authorized. Cinemas and theaters can function at up to 75% capacity and cafés and restaurants will also be able to attend at up to 75% capacity. Gyms, pubs and discotheques will also be able to operate at 50% capacity. Social and recreational activities with more than 150 people will be prohibited.
1.7 Open Businesses, Industries and allowed Gatherings
All officials and facilities, both public and private, that develop essential functions and whose operation are regulated by the different ministries can function, according to the implementation of the Strategy phases of the Ministry of Health to face the pandemic. The following essential sectors for planning are proposed: All facilities related to health, supermarkets, drugstores, gas service stations, post, delivery services, food storage and distribution centers; financial, basic service companies, telecommunication companies, public or private transportation, media, institutions related to public justice (https://www.serviciocivil.cl/wp-content/uploads/2020/03/Servicios-Esenciales-.pdf.pdf
Industries / companies that are prohibited are: Cinemas, theaters, restaurants, pubs, discotheques, all national parks, independent sporting events that gather public.
Ministry of Labor and Social Security publishes the “Step by Step Labor Plan” (Aug 4th 2020)
The document will serve as a “road map” for both employers and workers in the process of returning to presential activities. Within the framework of the end of confinement promoted by the Government of Chile, this plan seeks to deliver concrete and practical recommendations, so that all the enterprises and companies know them and know how to prevent contagions in the workplace. "Paso a Paso Laboral” contemplates 7 stages that will help workers and employers guarantee an adequate return to their labor activities.
In addition, the web page "Paso a Paso Laboral" (www.pasoapasolaboral.cl) will be have relevant information on labor, health and safety at the work place, as well as a roadmap that will serve as a guide.
1.8 Shareholder's meetings and other meetings of companies
Long distance participation and voting for Shareholders Meetings
On 18 March 2020, the Financial Market Commission (“CMF”) issued general rule 435 (hereinafter “NCG Nº 435”) amending general rule 273 from 2010, which, in turn, regulates the voting systems for shareholders meetings. Given the current sanitary situation Chile is enduring on account of Covid-19, or coronavirus, and the responsibilities the law has vested on it, the CMF authorized the use of technological means to ensure participation and voting of shareholders in shareholders meeting of openly-held corporations and special corporations subject to the supervision of the CMF, of bondholders in bondholders meetings or meetings of quota-holders in quota-holders meetings for funds subject to CMF supervision. Under NCG Nº 435, shareholders, bondholders or quota-holders, as applicable, may participate and vote from afar provided the technological means used to such ends guarantee the proper identification of participant and simultaneous or secret balloting, as applicable, during those meetings or assemblies.
The Board of directors of the foregoing corporations or fund managers or the representative of the bondholders shall implement the suitable technological means to ensure the requirements mentioned, along with certifying fulfillment of such a situation.
The corresponding summoning notice to the meeting or assembly shall include the fact that long distance participation and voting will be allowed, and record shall be set in the attendance registry and in the relevant minutes to be drafted of the meeting, of who were the shareholders, bondholders or quota-holders, as applicable, that used said mechanisms. However, for this case, the CMF authorized the use of technological means in meetings and assemblies having been summoned prior to the passing of the NCG Nº 435, provided notice is issued sufficiently in advance to the date on which said meetings are to be held.
Finally, the CMF instructed that, if because of sanitary limitations the authorities may implement, or because of the lack of technological means, the meeting cannot be held, the company or entity may invoke force majeure and suspend or postpone the meeting, with the argument being ultimately assessed by the CMF.
In the case of Board meetings, please bear in mind that Board members were already authorized to hold those meetings through technological means, without having to be personally present, provided certain requirements were met. The latter notwithstanding, in order to carry out the resolutions adopted, the minutes ought to be signed by each director in attendance in the meeting. To these ends, the CMF issued last February general rule 434 (“NCG 434”), which makes easier the process of signing board meeting minutes in respect of every director in attendance, who may all use an electronic signature.
NCG 434 sets forth that, to check the identity of the director that electronically signed the minutes (in cases in which advanced e-signature is not used), the requirements are: (i) prior agreement of the Board establishing the means through which to evidence signatory identity and (ii) for the CEO, or whomever had acted as secretary during the relevant meeting, to set record, when incorporating the minutes into the book kept to such ends, of the fact that the electronic signature belongs to the director shown as having signed the relevant minutes.
1.9 Supply of essential medical goods
200,000 new COVID-19 diagnostic kits reach Chile
The supplies were donated by the Confederation of Production and Commerce of Chile (CPC) at a value of over CLP$3 billion (US$3.5 million).
The Government announces the COVID-19 innovation Challenge for protecting healthcare personnel
The Science Ministry is to spend CLP$800 million on the design and local manufacture of masks, face shields and protective suits that incorporate innovations like the use of copper, recycled material and 3D printing.
President Piñera receives the shipment: “We’re taking receipt of 72 new mechanical ventilators available where people need them”
The President of Chile, Sebastián Piñera has today received a shipment of 72 mechanical ventilators of the PB 560 model, which have life support functionality. They will be added to those already available in the healthcare network.
1.10 Health care
Government informed that the use of masks is required in all public transportation
Following the COVID-19 Emergency Committee meeting this morning, Public Health Undersecretary Paula Daza announced that as of 5 am on Wednesday the use of masks will be mandatory on all public or private transport. “We are talking about the Metro (subway), trains, buses, “colectivos” (shared taxis), privately hired passenger transport, remunerated air, and maritime transport,” explained the Undersecretary.
Hospital capacity has been increased by 1,732 beds, thanks to the early operation of five new hospitals: Gustavo Fricke, Felix Bulnes, Ovalle, Padre Las Casas and Angol. In addition, the government has established a field hospital and six medical attention posts (PAME) and brought in the services of the Sargento Aldea Hospital Ship.
It was also decided to bring forward the annual influenza vaccination campaign, which began on Monday, March 16, and will last for two months. The campaign aims to vaccinate 8 million people, especially high-risk groups such as children, senior citizens, pregnant women, the chronically ill and healthcare workers.
Compulsory use of masks in both public and private transportation, as well as in elevators and places that gathers more than 10 people.
Strengthening of the hospital network:
a. Integral health system because of COVID-19: From April 1st, an integral system has been in force, by which the Ministry of Health takes control of all public and private infrastructure to face the pandemic.
b. Creation of a special fund ($ 220 billion pesos) to get the needed products and equipment to fight against the pandemic.
c. Increase of available beds in the country: Following the opening of new hospitals in the country (Gustavo Fricke, Felix Bulnes, Ovalle, Padre Las Casas and Angol), as well as the establishment of field hospitals (i.e. Espacio Riesco), the full capacity for hospitalizations reaches 41.532 beds.
d. Other measures: 2.400 bed were added in 42 sanitary hostels along the country, addressed to people that cannot fulfill their quarantine at home.
Health Ministry announces new measures for addressing COVID-19
Health Minister Jaime Mañalich has outlined three strategic approaches to strengthening the steps being taken to prevent and combat coronavirus in Chile: increased treatment capacity, use of health residences for individuals who cannot quarantine in their homes and increased supervision of the measures designed to contain the pandemic. Healthcare Networks Undersecretary Arturo Zúñiga announced that more beds have been converted for critical care in three Metropolitan Region hospitals. These are the Public Assistance Hospital (formerly the Posta Central), the Las Condes Municipal Clinic and the Metropolitan Hospital. The Undersecretary explained that this will add 400 new intensive care beds to the integrated healthcare network. The new Metropolitan Hospital will increase the number of intensive care beds to 189, while the Las Condes Municipal Clinic will increase to 80 ICU beds. “We reached an agreement with the Mayor of Las Condes to convert the entire facility, adding 80 extra beds to our national stock of intensive care units,” the Undersecretary said.
Health Ministry reports lowest positivity rate in the last 7 days (July 14th)
Health Minister Enrique Paris and Healthcare Networks Undersecretary Arturo Zuñiga delivered Chile’s coronavirus pandemic update for the Arica and Parinacota region, where they toured the region’s healthcare network and met with local authorities. The Health Minister said, “The slight improvement continues. The numbers support that trend. At the national level, confirmed cases are down 16% in the past seven days and 36% in the past 14 days. So the figures are encouraging.” The positivity rate for PCR tests is 16%, which is the lowest average in the past seven days. However, the Minister said that this trip to the extreme north of Chile demonstrates that the situation outside of Santiago is being monitored closely. “We are concerned about the areas outside of Santiago. We do not want to make decisions from 2,400 kilometers away, but rather on site. We are also concerned about Antofagasta, Tarapacá and O’Higgins, along with Arica – regions where the incidence per 100,000 residents is high. We have come here to work with local authorities to find a way to implement better measures to control the pandemic,” said the Minister. Specifically, Arica is the city with the second highest prevalence of COVID-19 cases, at 226 per 100,000 inhabitants. The Minister explained that quarantines are not an easy decision and always take into consideration opinions from the regions.
1.11 Persons with a higher risk
Persons at higher risk are those over the age of 65 and people of all ages with certain health conditions, such as immunosuppression or chronic heart, lung, kidney, liver, blood, or metabolic diseases (for example, diabetes).
Chile is applying total quarantine in several communes in the country and fines have been determined for those who do not comply with the measures imposed by the authorities. Fines are established in the Criminal Code and the variation of the fine will depend on the criteria applied by the judge. Sanctions could terminate in prison. According to the Criminal Code, the fines can range from 6 to 20 UTM, that is, from CLP$300,000 to CLP$ 1 million (approximately from US$360,000 to US$1,200).
The Health Minister announces greater oversight and harsh penalties for failure to comply with COVID-19 preventive measures
Health Minister Jaime Mañalich stated today that “if we do not take the battle for Santiago seriously and fight it energetically, we will lose the war against COVID-19.” The Minister’s remarks were preceded by the warning that the regional health ministries throughout Chile, and particularly in the Metropolitan Region, “are going to take stronger action in their role of monitoring, fining and closing” in response to failure to comply with the quarantine and physical distancing measures that have been taken to decrease community transmission of COVID-19.
In regard to the directive to provide greater oversight, the Minister stated, “we are enormously concerned about the Metropolitan Region because it represents 81% of the new cases reported. Over the past 24 hours, eight out of every ten new cases that are reported are due to people with symptoms there.”
2. SUPPORT OF BUSINESSES
2.1 Legal basis
In parallel fashion, the government has undertaken strong economic measures, in the understanding that, in the short-term, an adequate provision of liquidity in the financial system is required to allow banks to assist companies – particularly those SMEs facing cash flow difficulties; additional State´s support for health services, including resources to ensure enough personnel and testing centers along the territory as well as sufficient measures of prevention, contention and mitigation; and interest rates exceptionally low to strengthen demand by fiscal policy and mitigate the COVID-19 impact on vulnerable companies and social groups.
• First package of economic measures: Emergency economic plan focused on protection of employment and incomes to families as well as liquidity for SMEs (US$11.7 billion ), which comprises: a law on employment protection, safeguarding 4.7 M. workers and allowing them to access the benefits of unemployment insurance and forbidding layoffs by force majeure; a bonus supporting family incomes for the most vulnerable groups, that will be offered to almost 3M people for $ 50.000 (approximately USD58); a new capital contribution of US$500 millions to Banco Estado; the suspension of the stamp and seal tax for 6 months. As a complement, the Congress has adopted several measures aimed to give liquidity to the national treasury: suspension for the period 2020-2021 of the contribution to the Pension Reserve Fund, equivalent to 0,2% of the GDP; authorization to indebt up to US$ 4 billions; “war economy”, meaning that all public divisions should transfer resources from their accounts to only one treasury account; postponement in 24 moths of the Financing Mechanism of Strategic Capacities of National Defense.
• As a second package of economic measures, a new fund to protect families for a total amount of US$5 billion was announced. This was possible because of the savings kept by Chile in the past. It has two aspects: one consists in the protection of the economic activity, aiming to mobilize credit for companies that represent 84% of the employment (fund up to US$3 billion); the other is the protection of incomes for the most vulnerable sector of our population (fund up to US$2 billion), initiative that will benefit about 3 million people through budgetary reassignments.
• As a third package, President Piñera announced a Bill of Law that creates an insurance to salaries from independent workers, as another supportive measure amid the COVID-19 crisis. This initiative will benefit more than 1.2 millions of Chileans, and will be submitted to those independent workers experiencing a fall in their salaries equal or greater than 20% of their average salaries, with at least 4 or 8 receipts during the last 12 and 24 months, respectively.
New tax measures agreed in the Emergency Plan for Revenue Protection and Economic and Employment Reactivation
June 15, 2020 . This agreement contemplates 3 main aspects: (i) an additional fiscal framework for up to USD 12 million over the next 24 months; (ii) protection of family revenues; and (iii) an economic and employment recovery plan. From a tax perspective, the agreement provides the following measures:
A tax credit on hiring equivalent to 23% of the value of the remuneration of each new employee. A 50% reduction of the Corporate Tax under the SME regime for the years 2020, 2021 and 2022. An extension of the suspension of payment of the Monthly Provisional Payments (PPM) for 3 months. The current suspension is effective until June 2020.
An exceptional refund of the remaining VAT tax credit to SMEs with good tax compliance. An extension of the 100% instant depreciation system until December 31, 2022. This mechanism was established by Law No. 21,210 on Tax Modernization and is currently in force until December 31, 2021. Regarding the year 2021, a release for investment projects from the 1% regional contribution incorporated by Law No. 21,210 on Tax Modernization. More information on the agreement reached is available on the website of the Ministry of Finance.
President Piñera highlights new Emergency Family Income payment: “We want it to reach all the families that need it”
On Friday July 3rd, President Sebastián Piñera highlighted the Emergency Family Income payments made to more than 1.5 million households as part of the social protection network that the Government has set up to address the socioeconomic impact of the Covid-19 pandemic. The benefit was extended to 1,506,575 families, including households with formal income that received the first payment and for whom the benefit was recalculated; families who were excluded from the first payment but now qualify; and households that include someone over 70 who receives the Basic Solidarity Pension or someone who receives the Basic Solidarity Pension for Disability.
“We want it to reach all the families that need it,” explained the President, who was accompanied by Social Development Minister Cristián Monckeberg. The maximum payment is 100,000 Chilean pesos (US$125) per person, so a four-person family has an assured income of 400,000 Chilean pesos for July and August. The Emergency Family Income currently benefits the 80% most vulnerable households in Chile, covering families without formal income as well as those with formal income below the established threshold. The Emergency Family Income is compatible with other benefits and so it does not exclude families covered by the Employment Protection Law, Unemployment Insurance or the benefit for self-employed workers.
Of the nearly 2 million households that have benefited from the Emergency Family Income to date, more than 60% are headed by women and more than 67% are outside Santiago. “We are not going to leave any Chilean family unprotected,” said the President. Qualifying families that have not yet received this second Emergency Family Income payment may request it until July 9, through the www.ingresodeemergencia.cl website.
President Piñera unveils new measures to support the middle class, including a bonus, solidarity loan, and housing and education benefits
On Tuesday, President Sebastián Piñera announced new measures to support middle-class families impacted by the Covid-19 pandemic.
The measures include a bond of Ch$500,000, which does not need to be repaid and will be paid to all middle-class workers whose pre-pandemic formal monthly income was between Ch$500,000 and Ch$1.5 million, but has fallen significantly. Ten days after this law is enacted, this aid will be paid to middle-class workers whose formal income has fallen 30% or more, including those who are employed, on suspended contracts, unemployed, working on contract or self-employed. The bonus will also be paid in decreasing amounts to workers with monthly income between Ch$1.5 and Ch$2 million who have experienced a reduction in their purchasing power. The President also announced a government solidarity loan for the middle class. Three monthly disbursements, for a maximum of Ch$650,000 each and a maximum total of Ch$1.95 million, are available to offset up to 70% of the drop in income. The loan will have a year grace period and three-year repayment term, with payments capped at 5% of income. “The State will forgive the loan if a family has been unable to repay the full amount by the end of that four-year period,” the President said. To protect middle-class housing, the President signed the 6-month deferral of mortgage loans through a state guarantee, and increased the three-month rental subsidy to up to Ch$250,000 applicable to rents up to Ch$600,000, which will cover up to 70% of rent payments for families whose income has fallen 30% or more. Furthermore, property tax payments for the second half of the year have been postponed for families whose income has fallen for all primary residences with a taxation value below 5,000 UF. Likewise, the President announced a new deadline to give students in higher education the opportunity to apply for preferential State financing and deferral of up to three months of state-guaranteed loans. “Our administration’s mission is to protect Chilean families in these times of adversity,” said the President. These measures come in addition to the US$30 billion social protection network created by the administration to protect the income and employment of 12 million Chileans.“It is only by acting very sensibly and urgently to address the shortfalls and needs of Chilean families and with great responsibility and vision in terms of solutions that we will be able to reconcile the protection that families need during this emergency with the equally necessary boost and ongoing protection that they require,” said the President.
2.2 Support measures
Employment Protection Law
On April 8th, 2020, it was published on the Official Gazette Ruling Nº 88 (issued by the Undersecretary of Treasury), required by law Nº 21,227 on employment protection, for purposes of accessing to the unemployment insurance benefits established in the Law. The Ruling indicates: the zones or territories affected by the act or declaration of authority issued within the context of the estate of catastrophe and the activities or establishments exempted from the interruption of the activities.
New Telework Law
On March 23, 2020, the bill on Telework was finally and completely approved by the Congress and ratified by the President of Chile. Therefore, according to transitory article number 2, this law will become valid and enforceable starting April 1st, 2020. This law regulates telework in the following terms: Definition of telework and remote work, Elements of remote work and telework, among other dispositions.
Financial Market Commission announces new measures to mitigate adverse economic effects
In the context of the pandemic and its financial, health and other consequences, the Chilean Commission for the Financial Market (CMF) has announced new measures aimed at mitigating their adverse effects. Thus, within the framework of its powers and in coordination with the Central Bank of Chile, it has announced the postponement of the application of the rules needed for the Chilean banking to be able to reach the Basel III standards introduced by the modifications to the General Law of Banks, published in January 2019. Initially, those standards should have been gradually begin applied as of 2021.
Cooperatives can refinance up to three installments in the payment of credits
Resolution 849 of the Department of Cooperatives of the Ministry of Economy, Development and Tourism recently published, allows credit cooperatives under the supervision of the same, to refinance up to three installments in the payment of credits if they are delayed for terms of less than 30 days. since the publication of said resolution, on April 6, 2020.
Decree Nº 553 establishes a tax measure for taxpayers subject to the presumptive income regime
On April 18, 2020, Decree Nº 553 was published, which, in addition to Decree Nº 420, extends the deadline for taxpayers subject to the presumptive income tax system to exercise the option to pay taxes on income obtained during 2019, on the basis of effective income determined under full accounting. The deadline is extended until 31 July 2020.
Financial Market Commission issues regulation regarding the treatment of provisions and information requirements for Covid-19 loans
The Financial Market Commission (CMF) reports that its Council approved on April 30th, 2020 a regulation (Circular No. 2,252), containing provisions for banks with regard to Covid-19 loans from the Guarantee Fund for Small and Medium-Sized Companies (FOGAPE).
The regulation addresses the following issues: exceptional measures for the treatment of provisions for credit in installments of the commercial portfolio; classification of debtors and calculation of delinquency; establishment of control procedures for the eligibility conditions of debtors; use of funds and; submission of periodic information to the CMF. Among the main aspects of the regulations, it should be noted that for those loans granted under the Fogape Covid-19 program, the provisions of the debtor’s installment loans that are rescheduled, and that meet the established conditions, may remain constant during the grace period or rescheduling period granted by the financial institution. This may be for up to six months.
This measure facilitates the conditions to provide this financing and, at the same time, protects prudential aspects of credit risk that must be observed by the financial institutions participating in the Covid-19 credit lines of Fogape.
The document also details the information that the institutions must provide to the CMF, with the aim of adequately monitoring the evolution of the granting of these loans, registration of fees and the main features of these operations. The CMF will also require the banks to set procedures for verification of credit requirements and commitments in regard to the use of funds, in accordance with the Law and the Regulations of Fogape Covid-19, which must be made available to the Commission. The terms of this regulation will be effective as of April 30th. April 3oth. until October 31th 2021. Access here the Circular issued by the Financial Market Commission (Spanish).
Law No. 21,232 that amends Law No. 21,227, which authorizes access to the benefits of the unemployment insurance under Law No. 19,728 in exceptional circumstances, in the matters it indicates
On April 6, 2020, Law No. 21,227 entered into effect, authorizing access to the benefits of the unemployment insurance in the context of the sanitary crisis caused by Covid-19 (hereinafter, the “Law on Employment Protection” or “LEP”).
In order to improve the practical application and implementation of the aforementioned act, on June 1, 2020, Law No. 21,232 was published, amending the Law on Employment Protection in the following matters:
Percentage of social security and pension contributions to be paid during the suspension of the employment contract
While the suspension is effective, the employer must pay the social security and pension contributions, both of its own and of the employees’ burden, with the exception of the contribution for insurance on labor accidents and occupational diseases.
The foregoing must be determined in accordance with the following calculation basis:
The basic contribution of Pension Fund (AFP), AFP commission and SIS, will be determined on 100% of the benefits that the employee is entitled to receive from the unemployment insurance.
Other social security and health contributions shall be calculated on the last monthly remuneration received by the employee, prior to the suspension.
Termination of the employment contract
Dependents subject to the Law on Employment Protection may not be dismissed, notwithstanding that the employment contract may be terminated due to (i) the employee’s voluntary resignation, (ii) mutual agreement of the parties, (iii) employee’s death, (iv) expiration of the fixed term; and (v) completion of the work or task that lead to the contract.
If the employer terminates the employment relationship after receiving the benefits of the LEP, severances arising from the dismissal must be calculated on the last monthly remuneration received by the employee, prior to the suspension.
Termination of employment contracts based on the grounds set forth on article 161 of the Labor Code ("Business Necessities" and "Will of the Employer"), could only take place with respect to employees who are not subject to the Law on Employment Protection.
Presumption in agreements on temporary suspension of the employment contract
The Law on Employment Protection enables the execution of mutual agreements on temporary suspension of the employment relationship, when the employers’ activities or operations are totally or partially affected.
The new regulation presumes that the employer's activity is partially affected when, during the month prior to the agreement’s execution, incomes from sales or services net of VAT have decreased in 20% or more with respect to the same month of the previous year.
Maternal dismissal privilege
Employment contracts of female employees protected by dismissal privilege may not be suspended, whether by an act of authority or by mutual agreement.
Prohibitions on corporations
Corporations of Law 18,046 (Sociedades Anónimas), which invoke the Law on Employment Protection, or that are part of a holding in which any of its entities has invoked the LPE, may not distribute dividends to their shareholders during the business year in which the company or entity has suspended employment contracts.
Directors of open stock companies that have executed agreements on temporary suspension of the employment contract with all or most part of its employees, may not receive fees for said position that are higher than the percentages corresponding to the unemployment insurance, during the suspension period.
Companies controlled by entities that maintain capital or related companies in territories or jurisdictions considered “tax havens”, will not be able to benefit from the Law on Employment Protection.
President Sebastián Piñera enacted a law that allows the withdrawal of 10% of pension funds (AFPs)
Once it is published in the Official Gazette, people may request the withdrawal of 10% of what they have accumulated in their individual pension fund accounts. Currently, it only remains for the National Comptroller to endorse the promulgatory decree sent by the President so that it can be published in the Official Gazette.
President Piñera announces a reactivation plan to help recover 1.8 million lost jobs
President Sebastián Piñera announced on Friday July 31st, a reactivation plan to help recover the 1.8 million jobs lost during the coronavirus pandemic and world recession. The President announced an urgent, large-scale employment subsidy plan that could benefit up to a million people and will cost around US$2 billion. He also announced a robust plan of public investment in physical, social and digital infrastructure, prioritizing cities and housing, highways and roads, ports and airports, potable water, irrigation and reservoirs, hospitals and outpatient clinics, educational establishments, public transportation, parks, sports and cultural centers, digital networks and resources for regions and municipalities. Public investment for the period 2020-2022 will therefore total US$34 billion, US$4.5 billion of which is additional investment. This could generate 250,000 new jobs, with public works being developed in every region of Chile in a decentralized manner.
3. SUPPORT OF THE JOBMARKET
In an extraordinary Monetary Policy Meeting, the Central Bank cut its interest rate by 75 basis points to 1%. This was the largest adjustment to the rate since 2009 - during the subprime crisis - and took it to its lowest level since July 2010.
To help the financial sector, the Central Bank will offer banks a conditional financing facility to increase lending (FCIC) for six months. This will be for loans with a maturity of up to four years, with priority for lending to SMEs. In addition, the currency sale program will be extended from May 29 to 9 January 2021.
The Central Bank also announced a bank bond purchase program and offered companies the option of using their bonds as collateral for operations with it. Normally, it is almost exclusively bonds issued by the Central Bank that can be used for this purpose.
Chilean IRS creates the Certificate No. 66 on donations related to Covid-19
On April 30, the SII issued the Resolution No. 49, which creates the certificate No. 66, denominated "Certification of donations and expenses associated with the global epidemic Covid 19". This certificate shall be issued by the recipients to the donors for the donations made to them in accordance with the terms of the Circular No. 32, dated 29 April 2020.
Plan to support SME exporters
These short- and medium-term measures are being implemented to support SME exporters, which exported around US$2.3 billion and contributed 40,029 jobs in 2018. This measures includes: Simplification of paperwork, Monitoring, Logistical Agreements, Trade Intelligence, Connecting Supply and Demand, Specific Markets and Agreements.
Circular No. 38 and Resolution No. 56: Tax Authority gives instructions on the temporary reduction of the Stamp Tax rate
June 2, 2020
On May 25, 2020, the Chilean IRS issued instructions on the temporary decrease to 0% of the Stamp Tax rate accrued between April 1 and September 30, 2020 (the "0% Rate Term").
In general terms, the Circular establishes the following:
Although this is a transitory decrease, it benefits extensions and renewals made during the 0% Rate Term, which are linked to documents originally granted and taxed. This represents a change of criteria by the Chilean IRS.
The application of the reduced rate to the issuance of bonds or short-term debt securities whose first placement is made during the 0% Rate Period, will benefit from the reduced rates exclusively for placements made within such period.
In the case of imports or entry of goods from abroad into free trade zones affected by the sole tax of Article 3 of Decree Law No. 3,475 of 1980 ("Stamp Tax Law"), the reduction of the Stamp Tax rate is also extended to operations for which payment occurs after the 0% Rate Term. In these cases, it is important that the acceptance of the respective customs document is verified within such period.
Instructions are given on the accrual, enforceability and other aspects of the tax applicable to credits related to finance exports.
For the purposes of applying the exemption for refinancing operations indicated in Article 24 No. 17 of the Stamp Tax Law, it is considered that the operations whose tax accrued during the 0% Rate Term were affected by the rates that would have applied if the aforementioned reduction had not occurred. Additionally, for purposes of this disposition, taxes accrued during the 0% Rate Term are treated as effectively paid.
Although the Stamp Tax rate is temporarily reduced, the corresponding accessory tax obligations remains.
Resolution 56, issued on May 26, confirms that this measure does not exempt compliance with accessory obligations, such as the declaration of the tax through forms No. 24, 24.1 and affidavit 3324.
5. TENANCY AND LEASE
Ministry of Health sets maximum rental prices to face the pandemic
By means of Exempt Resolution No. 209, published on 26 March 2020, the Chilean Ministry of Health set at 0.2 UF monthly per square meter the maximum price for leases of properties that will be taken in lease to meet the necessary measures to face the Covid-19 pandemic.
For further information, please check the complete resolution at: https://www.diariooficial.interior.gob.cl/publicaciones/2020/03/26/42615/01/1745881.pdf
6. LEGAL PROCEEDINGS
Law that authorizes access to the benefits of the unemployment insurance of the Law No. 19,728 in exceptional circumstances
On April 6th, the new law on employment protection entered into effect, within the context of a series of emergency measures taken by the Chilean authority as a result of the COVID-19 disease. The new Law provides the possibility of accessing the coverage of the unemployment insurance in three main scenarios.
Suspension of electoral processes and extension of the union directors’ office
May 29, 2020
On May 29th, 2020, Law Nr. 21,235 which temporarily suspends electoral processes in labor unions, extending the term of union leaders and delegates’ office (hereinafter, the “Law”), was published in the Chilean Official Gazette.
In accordance with the law’s single article, electoral processes of union leaders and delegates that were not completed before the publication of the Law, will be deemed as legally suspended, provided that they had started before the declaration of state of constitutional exception due to catastrophe issued on March 18th, 2020, or should have begun during the term of said exception.
In these cases, union leaders and delegates’ office will be extended for at least 15 business days, or for the number of remaining days in office by March 18th. This extension will be valid as of the cease of the state of exception or its extensions.
To provide an example, if the office term of a union leader was to last until April 15th, there are 28 days from March 18th until such date. Hence, provided that the state of constitutional exception expires on June 16th, the union leader’s office will last until July 14th, this is 28 days after the expiration of the exception aforementioned.
In order to determine the number of union leaders’ enjoying dismissal privileges, the number of employees affiliated to the union by March 18th will be considered.
The office term will be suspended as long as there are employees affiliated to the relevant union, rendering services in any region of the country where the state of exception is still effective. However, if the union deems possible to complete the election process, it may be conducted in accordance with applicable bylaws and legal regulations.
The suspension of electoral processes will not be applicable for the formation of new unions.
The same provisions explained above will be effective as applicable regarding associations of public employees regulated by Law Nr. 19,296.