Chile VAT in zoom App
Frequently Asked Questions – Chile VAT
What is VAT?
VAT stands for Value Added Tax, which is an abbreviation for Value Added Tax. The charge for VAT is generally due for the sale of goods as well as services.
It is applicable to most goods and services that are purchased and sold in Chile for consumption or use. Because the tax is ultimately borne by the final consumer, it is a consumption tax.
Who must pay VAT?
Normally, the supplier who sells goods or services is responsible for billing and collecting the VAT from the customer. After the VAT has been collected, the supplier informs the tax authorities and remits the collected VAT to them.
It is determined that in cases where electronic supplied services (ESS) are provided by a company that is based outside of Chile (as is the case for Zoom), the customer is responsible for collecting and remitting the appropriate amount of VAT depending on whether the customer is engaged in activities that are subject to Chilean VAT.
In the event that Zoom does not provide services to the customer that are subject to Chilean VAT (i.e. individuals and legal entities that are not subject to Chilean VAT on their activities), Zoom shall charge VAT on all supplies provided to the customer by Zoom. As long as the customer operates in Chile under the reverse charge mechanism and carries out activities that are subject to VAT, under which both individuals and legal entities are affected, the customer is responsible for self-assessing the VAT.
Why am I being charged VAT?
The Zoom Cloud Services Division is required by Chilean VAT regulations to collect and remit VAT on services provided to customers who do not engage in activities subject to the VAT in Chile.
Zoom customers in Chile may need to self-assess their VAT on the services they purchase from Zoom if they are performing activities that are subject to VAT.
The TAX ID Number is a number that is assigned to you by the IRS.
The Tax Identification Number (TAX ID), which is a unique 9-digit number that identifies a person or entity as being registered in Chile for the purposes of VAT and other taxation.
How do I enter my Tax ID Number?
In order to indicate that you carry out activities that are subject to Chilean VAT and you have your Tax ID Number entered, you also need to check the box to indicate you are registered for VAT in Chile. Please follow these steps:
- Join the Zoom Portal by logging in.
- From the Account Management section, click on Billing.
- Then click on the Billing Information link.
- Select the Billing Contact option and enter the Tax ID Number (which appears after the Sold To Contact Address field).
- You can find the number after the Sold To Contact Address field.
- You can check the box that indicates that you are carrying out ‘Activities in Chile that are subject to VAT’, and then click Save.
What happens if I do not have a Tax ID Number?
Customers in Chile who are unable to provide a valid Tax ID Number or who do not check the box on the Billing Information tab of their Zoom account to indicate that they carry out activities in Chile which are subject to VAT will be charged and collected a Chilean VAT on their purchases from Zoom.
What is Zoom’s method of determining which customers are subject to Chilean VAT?
As a matter of fact, the Chilean VAT law prescribes a number of rules for the identification of the place where services are consumed by individuals and businesses.
As long as at least one of the following criteria is satisfied, Chile will be considered to be the place of consumption or “use”.
- This is due to the fact that the IP address used to facilitate the service is registered in Chile.
- In order to make the payment of services, a credit/debit card, a bank account or similar payment method must be issued or registered in Chile.
- A customer provides an address for invoicing or the issuance of the payment receipt that is in Chile; or
- The mobile phone that is being used to receive the service has Chile as its country code on the SIM card.
The costs of the Chilean VAT will be charged on the supplies Zoom makes to you as long as any of those conditions are met, and if you do not provide your Tax ID number, and do not check the box in your Zoom account that states you carry out activities in Chile that are subject to VAT, then Zoom will have to charge Chilean VAT on the supplies it makes to you.
Is there any threshold for VAT on electronically supplied services (ESS)?
Zoom does not charge VAT on any sales in Chile in which the customer does not engage in activities subject to Chilean VAT.
Are there any special exemptions applicable for charities under which VAT may not be charged?
No. Tax will be charged on all donations made to charities unless they provide a Tax ID Number and check the box in their Zoom account indicating that their activities are subject to Chilean VAT.
Does Zoom provide VAT exempt or services that are not subject to VAT?
Zoom will not charge VAT to customers who can provide proof that they carry out activities that are subject to VAT in Chile. Other exemptions are not available at this time.
Zoom customers may be required to self-assess VAT on services purchased from Zoom in Chile if they perform activities subject to VAT in Chile.
Are there any VAT obligations for me as a customer?
If Zoom is used to purchase services that are subject to VAT in Chile, Zoom customers may have to self-assess their VAT.
As long as you enter a valid Chilean Tax ID number in the Zoom billing portal and check the box indicating that you carry out activities that are subject to VAT in Chile, no VAT will be charged to you.
Zoom must be notified if your VAT status changes by unchecking the box indicating that you are carrying out VAT-registered activities in Chile and removing the Chilean Tax ID number from the Zoom billing portal.
What if I carry out activities subject to VAT in Chile and I forget to check the box and forget to provide a Chilean Tax ID number?
Zoom’s billing portal allows you to update the checkbox at any time if you wish to do so. The next time an invoice is issued, Zoom will not charge VAT on the invoice if this box is checked and a valid Tax ID number is supplied before the next invoice is issued. Nevertheless, there may be a requirement for you to self-assess, declare, and pay the tax on your Chilean VAT return. The VAT charge will be applied if the VAT status checkbox is unchecked at the time of the next invoice or if a Tax ID has not been provided.
Zoom reserves the right not to refund the VAT charged on previous invoices, especially in cases where a valid Chilean Tax ID wasn’t provided and the checkbox was not ticked. Under the current Chilean VAT rules, Zoom is not allowed to refund the VAT charged. I estimate that the VAT was correctly charged at the time of supply, assuming that it was correctly charged. If this is the case, the Chilean Internal Revenue Service (“SII”) should be contacted in order to request the relevant authorization, as you may be allowed to use the VAT charged as a credit.
Decision tree – will I be charged Chilean VAT?
Disclaimer
The tax circumstances of each customer are unique. Please note that the above information is not tax advice, but an overview of relevant tax rules. In the absence of customized tax advice, Zoom strongly recommends that you speak with a professional tax advisor.
Frequently Asked Questions: Chilean VAT
What is VAT?
Value added tax is abbreviated as VAT. Generally, VAT is paid on the sale of goods and services. Most products and services consumed in Chile or bought for use there are subject to this tax. Since it affects the consumer in the end, it is a tax on consumption.
Who must pay VAT?
A supplier who sells a product or service is generally responsible for invoicing and collecting VAT from the customer. Thereafter, the supplier will declare the V.A.T. collected and remit it to the tax authorities.
If a supplier located outside Chile provides services designed to be delivered electronically (as in the case of Zoom), the obligation to collect and remit local VAT will depend on the client’s activities based on the validity of the client’s VAT registration in Chile.
It is Zoom who will be the one to collect VAT in Chile on the services provided to the client if the client is not carrying out activities liable for VAT in Chile (for example, natural or legal persons not subject to VAT in their activities). Whether the client carries out an activity in Chile that is subject to VAT (e.g., individuals or legal entities), the client must study the existing taxation mechanism for tax payer investment in order to evaluate the client’s tax liability within the country.
Why am I charged VAT?
Currently, Zoom is required by Chilean VAT regulations to collect and remit Chilean VAT on services provided to customers that do not conduct activities within Chile that are VAT-related.
It is possible that customers who perform activities which are subject to Chilean VAT on the services they purchase from Zoom will have to self-assess their VAT.
What is the RUT?
It is a unique 9-digit tax identification number (XX.XXX.XXX-X) issued by the Chilean Government to identify individuals and entities that are registered with the Chilean government for the purposes of taxation.
How do I enter my RUT?
To submit your RUT to Chile and check the box that indicates that you are conducting VAT-exempt activities in Chile, you must be registered for VAT in Chile in order to enter your RUT:
- The Zoom Portal can be accessed by signing in
- And clicking on the Billing tab.
- To access the Billing Information section, click on the Billing tab.
- Enter your RUT in the Billing Contact (just beneath the Sales Recipient field) by selecting it from the Billing Contact menu.
- Type in your RUT.
- Please indicate whether or not activities in Chile are subject to the Chilean sales tax (VAT).
What should I do if I do not have a RUT?
Whenever Zoom provides services to Chilean customers, Zoom is expected to charge and collect Chilean VAT when providing services in Chile if the customer cannot provide a valid RUT or does not select the box on the Billing Information tab in their Zoom account that signifies that they perform activities subject to Chilean VAT.
How does Zoom determine which customers are subject to Chilean VAT?
Chilean law specifies some rules that determine the place where services are consumed or used by both individuals and businesses.
When both of the following conditions are met, then at least one point in time may be considered the place of consumption or “use” as Chile:
- In order to access the Internet, the device used to access these services must have a Chilean IP address.
- Payments for the services were made using a credit card, debit card or bank account issued or registered in Chile.
- The client’s Chilean address was to be used for invoicing and proof of payment.
- Using a mobile phone with a Chilean SIM card, the service was received.
Zoom will charge Chilean VAT when providing you with services if any of these criteria are met, and you haven’t provided your RUT or indicated that you carry out activities subject to VAT in your Zoom account.
Is there a minimum to apply VAT on the supply of services provided electronically?
Not at all. If the customer does not carry out activities that are subject to VAT in Chile, then Zoom charges VAT on all sales of its services in Chile.
Are there special exemptions applicable to charities in which VAT is not applied?
No. The client must provide a RUT and check the box in their Zoom account indicating that they carry out activities subject to Chilean VAT. All services provided to charities will be subject to taxes unless they provide a RUT and indicate that they carry out activities subject to Chilean VAT.
Does Zoom provide VAT exemptions or services that are not subject to VAT?
Customers proving that they are involved in activities in Chile that are subject to Chilean VAT will not be charged VAT by Zoom. Other exemptions are not currently in place.
It is possible that customers who perform activities which are subject to Chilean VAT on the services they purchase from Zoom will have to self-assess their VAT.
Do other VAT obligations apply to me as a customer?
Zoom may be required to require its customers, who have purchased services from Zoom in Chile and are subject to VAT in Chile, to self-assess the VAT due on the services they have purchased.
Those who have indicated that they operate in Chile, check the box indicating that they have activities that are subject to VAT and enter the correct RUT in the Zoom billing portal will not need to pay VAT.
Zoom is obligated to notify you if the VAT status of your business changes. It is possible to remove your RUT from Zoom by de-checking the box that indicates that your activities are subject to Chilean VAT and by removing your RUT from the Zoom billing portal.
What happens if I carry out activities subject to VAT in Chile and I forget to check the corresponding box and provide a Chilean tax identification number?
In the Zoom billing portal, you have the option to update the check box at any time. The value of VAT will not be charged to you on future invoices if the box is checked, and after the next invoice is issued you provide Zoom with a valid tax identification number. If you are assessing, declaring, and paying tax on your Chilean VAT return, the situation may not be the same. Upon issuance and receipt of the following invoice, if the VAT status checkbox is not checked or if the tax ID isn’t provided, VAT will be charged to the customer.
Due to the lack of valid Chilean tax identification documents provided, as well as the missing check-box on previous invoices, Zoom isn’t permitted to refund VAT charged on previous invoices based on current Chilean VAT regulations. The reason for this is that the VAT was correctly assessed as soon as the service was provided. Several companies use or are considering using transportation technology to do business. Both of those companies need to address the internal taxation program to obtain the authorization they need in this case.
Decision Tree: Will Chilean VAT apply to me?
Disclaimer
Tax circumstances are unique to each client. Rather than tax advice, this information is meant to serve as a general overview of the relevant laws. Please consult with a professional tax advisor if you need tax advice tailored to your specific circumstances.