This article provides a data-driven overview of the sole proprietorship status and individual business taxation in Chile for 2025. It details the official process, available tax regimes, and rates relevant to freelancers, consultants, and small business operators.
Availability of Sole Proprietorship Status in Chile
In Chile, individuals may operate a business as a sole proprietor under the official designation Persona Natural con Inicio de Actividades. This status enables individuals to invoice clients by issuing boletas de honorarios (fee receipts for professional services) or facturas (invoices for commercial activity), without establishing a separate legal entity. The framework is specifically designed to simplify business activities for independent professionals, service providers, and micro-entrepreneurs.
Registering as a sole proprietor is a standard procedure available to both Chilean citizens and residents. The process is managed by the Servicio de Impuestos Internos (SII), Chile’s national tax authority.
Sole Proprietorship: Key Characteristics and Taxation
The table below summarizes the essential features and taxation parameters for sole proprietors in Chile as of 2025:
| Aspect | Description / Rate |
|---|---|
| Status Name | Persona Natural con Inicio de Actividades |
| Eligible Activities | Professional services (boletas de honorarios), General commerce (facturas) |
| Who Can Register | All Chilean citizens and residents |
| Registration Authority | Servicio de Impuestos Internos (SII) |
| Professional Services Tax (2025) | 12.25% withholding (Impuesto Único de Segunda Categoría) |
| Commercial Activities (Pro Pyme Regime, 2025) | 10% starting rate, simplified accounting |
| Separate Legal Entity Required | No |
Taxation Overview for Individual Entrepreneurs
Professional Services
For individuals operating as service providers and issuing boletas de honorarios, Chile applies a standard withholding regime:
- For the year 2025, a 12.25% withholding tax is applied to gross receipt amounts. This rate is legislated to increase gradually to 17% by 2028.
- This withholding (termed Impuesto Único de Segunda Categoría) is automatically deducted by the client, who remits the funds to the tax authority.
Commercial Activities & Small Business Operations
For sole proprietors engaged in general commercial activities (e.g., retail, consulting beyond honorariums), two options are available:
- Participation in the Régimen Pro Pyme (intended for small businesses) with a starting tax rate of 10% on net taxable income in 2025. This regime is known for its simplified accounting process.
- Alternatively, the general regime is available for those who do not qualify for or opt out of Pro Pyme.
Both regimes are administered and overseen by SII. Registration is mandatory before issuing invoices or conducting formal business operations.
Getting Started: Registration Process
Registering as a sole proprietor (Inicio de Actividades) is a requirement prior to any business activity. The basic steps are:
- Apply directly with SII through their online platform or at a local branch
- Provide valid identification and address documentation
- Declare the type of business activity (service, trade, professional, etc.)
- Upon approval, receive authorization to issue electronic boletas and facturas
Further details and forms are accessible via the official SII website.
Official Government Resources
Pro Tips for New Sole Proprietors in Chile
- Calendar your tax changes: Note that professional services withholding rates are increasing annually until 2028—plan projected cash flow with this in mind.
- Choose the right regime: Early assessment of whether Pro Pyme or the general regime best fits your activity is crucial for tax optimization.
- Go digital from the start: Set up electronic invoicing and recordkeeping immediately post-registration as this is the standard in Chile and required by SII.
- Keep documentation organized: Routine organization of contracts, invoices, and proof of expenses will simplify annual declarations and SII reviews.
In summary, Chile’s sole proprietorship regime, Persona Natural con Inicio de Actividades, provides a streamlined framework for operating an individual business. Taxation is transparent, with clear rates for both professional services and commercial activities, and the entry process is highly accessible for residents. Always monitor the official SII website for procedural updates and rate changes throughout the year to ensure compliance and accurate financial planning.