Chile remains a lucrative country in which to operate, and with limited O&G exposure, there is unlikely to be any significant changes to the current fiscal regime. However, the recent referendum which rejected changes to the constitution to make it more socialist, support a change to our outlook, making it Positive.
September 5, 2022
Americas - South
As a general rule, the oil and gas industry is subject to the same general tax regime and tax regulations as any other industry in Chile. However, Chile’s Political Constitution, the exploration, exploitation or benefits arising from deposits or oil fields that contain substances that are not freely traded may be carried out by means of administrative concessions or through special operating contracts or agreements.
As the seventh largest economy in the Western Hemisphere, Chile has historically enjoyed levels of stability and prosperity among the highest in the region. In October 2019, widespread civil unrest broke out in Chile in response to perceived systemic economic inequality, which had a significant impact on Chile’s economy. Pursuant to a political accord in response to the civil unrest, Chile plans to hold a plebiscite in October 2020 on whether or not to draft a new constitution. Chile’s solid macroeconomic policy framework has provided the fiscal space to respond to the economic effects of the social unrest and the COVID-19 pandemic through an economic stimulus package of about USD16.75 billion, which is expected to increase the fiscal deficit to 8% in 2020. Chile boasts one of the strongest sovereign bond ratings in Latin America. The country’s economy grew 1.1% in 2019, and the Chilean Central Bank forecasts Chile’s economic growth in 2020 will be in the range of -1.5 to -2.5% due to the impact of the COVID-19 pandemic.
Source: ESRI, Heritage Index, HMG Foreign & Commonwealth Office, US Department of State, International Trade Administration, International Law Review, Ernst & Young, Wood Makenzie & OGA data.
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