Sales tax for everything is 19%, corporate profit tax is 17%. There's a tax ladder for personal profit which goes from 0% to 40% on the highest tier, although very few people pay that.

Average pay for a software engineer is around USD 2.000-4.000 net monthly, with living expenses at around USD 1.500 monthly (including 1 bdrm apt in a nice neighborhood for USD 400 monthly rent).

A BigMac meal costs around USD 6, but you may also have a nice homemade-like lunch (a lot healthier) for around the same price.

Is not a bad place to live, nor really that expensive. Although Santiago is one of the most expensive cities in the region, but with the added bonus of security, stability, and low corruption[1], something rare for these latitudes.

[1] In 2010, Chile had almost the same Corruption Perception Index than the US: http://www.transparency.org/policy_research/surveys_indices/...

for real? i pay 10% of what i receive (income) each month and get a chunk back at the end of the year. there's also a sales tax. and that's it.

There are different ways of paying taxes, mainly:

1) if you are "self employed" and just do "boletas" (a sort of personal invoice), you pay 10% of that each month as a provision of your total income tax, usually this is paid directly by the receiver of the invoice to the SII (chilean equivalent of the IRS)

2) if you have an employment contract from a company, the company pays whatever the corresponding tax is for what they are paying you each month directly to the SII

But, each year you have to file a tax declaration form with the SII. And depending on the total amount that you earned during the year, there's a corresponding tax rate that you have to pay. Then if the total amount of the provision you paid during the previous year is higher than what you had to pay, you get a return on the difference (adjusted for inflation), but if the corresponding rate is higher (10% in your case), you'll have to pay the SII the difference.

If you only have one employment contract, from one company, then your total tax (global complementario) has already been paid, and you are excused from having to file your tax declaration.

Here's the table for the tax (global complementario) you have to pay corresponding to your total income:

http://www.sii.cl/pagina/valores/global/igc2011.htm

The way the table works is kind of complicated, the tax rate you have to pay depends on the total amount, but you have to pay a different rate for each of the tax brackets/tiers that your total earnings fall in. There's also a maximum total discount that you can subtract from the total as "expenses". The total is easy to calculate from the table using the "cantidad a rebajar" (discount) column though.

For example, if you make Ch$ 15 M (around USD 30k) a year, then you have to pay (according to the table above), 10% of: Ch$ 15 M, minus the discount on the same row = Ch$ 1.5M - 900k = Ch$ 600k. Hence, if you paid Ch$ 1.5M in provisions during the previous year, you'll get a Ch$ 900k (about USD 1.8k) return.

There's also another discount for expenses, I don't fully understand how it works though, but it would mean paying even less in the example above, and getting a higher return.

I'm not an accountant though, so don't take my word for it and get well informed before filing a tax return form.

Edit: changed some wording for clarity, added some info and changed the link to a more current table

So if you made $200k annually you would still pay the same %10? (I'm trying to find out the practical upper limits.). I based the higher taxation on the %20 payroll tax, but if the limit are low then it doesn't do much it seems. Also when I read the somewhat confusing tax document, there are pretty nasty taxes for foreign income and such, which would seem to apply for expats.

http://en.wikipedia.org/wiki/Tax_rates_around_the_world http://www.sii.cl/aprenda_sobre_impuestos/estudios/sistemren...

as far as i can tell the numbers in wikipedia are completely off: the "10% pension" is (1) still your money (it's a personal fund, not a social security system); (2) capped at $300 a month; and (3) completely optional if you're self-employed; i pay less than $100 for optional health insurance monthly (no idea where 7% comes from).

also, your link to sii doesn't work, but my understanding is that if you are paid from abroad and it's wired to you each month, and you convert it to pesos locally, it's just income and charged at the same rate as any other income.

in general the tax system is very transparent and open - it's easy to be self employed and you just pay 10% monthly as i described. at the end of the year chilean banks declare your interest etc etc, you get a web page that lists everything that you click "ok" on, and then you get a refund.

i have no idea about $200,000 a year salaries. i am just describing normal life working for an american company as a contractor (ie self employed from the chilean pov). frankly, if you earn that much, or you're looking for some kind of tax haven, pay someone for some advice instead of reciting stuff from wikipedia that you don't have the context to understand.

[both pension and health fund are private, in case that wasn't clear]