SANTIAGO, October 31, 2018 – Chile carried out two reforms in the past year to improve its business climate
to help create jobs, stimulate domestic investment and become a more competitive economy, says the World Bank Group’s Doing Business 2019: Training for Reform report, released today.
The reforms in Chile covered the Doing Business areas of Starting a Business and Enforcing Contracts.
Starting a new business was made easier and faster with the introduction of an electronic system, which replaced the earlier requirement to submit sealed accounting books and invoices to the Chilean Internal Revenue Service. As a result, it now takes six days to start a new business in Chile, compared with 7.5 days earlier. This compares well with the nine-day average among economies of the OECD high-income grouping, of which Chile is a member. It also compares well with the 28-day average among Chile’s geographic neighbors in the Latin America and the Caribbean region.
The second reform significantly improved contract enforcement by allowing plaintiffs to file the initial complaint electronically. As a result of this reform, Chile edged up several places to a global rank of 49 in the area of Enforcing Contracts. It takes 480 days and costs 25 percent of the claim value to enforce a contract in Chile, compared with 768 days on average in Latin America and the Caribbean and 582 days among OECD high-income economies.
Chile’s overall global ranking in this year’s Doing Business report is 56. Chile has carried out a total of 10 reforms in the 16 years since Doing Business was first launched.
“Chile’s reform agenda is steady, although it would benefit from moving faster. An acceleration in pace will go a long way in removing hurdles to private enterprise, with a focus on areas where entrepreneurs still experience difficulties such as access to credit and paying taxes,” said Santiago Croci Downes, Program Manager of the Doing Business Unit.
Chile performs well in the area of Getting Electricity, where it is ranked 36 globally. For example, it costs 49 percent of income per capita for a business to get connected to the electrical grid in Santiago, compared to an average of 64 percent among high-income OECD economies. And it takes 43 days to connect to electrical grid in Santiago, compared with 77 days among high-income OECD economies.
Chile continues to have challenges in the area of Paying Taxes. It takes a business in Chile 296 hours a year to comply with its tax obligations, compared to 159 hours on average among its OECD peers. Furthermore, companies must invest an additional 26 hours to comply with Value Added Tax (VAT) refund requirements in Chile, and it takes 38 weeks to obtain the refund, compared to 7.5 hours and 15 weeks, respectively, across OECD economies.
A case study on enforcing contracts and resolving insolvency, in this year’s report, highlights the Chilean initiative of making insolvency law training compulsory for relevant civil judges (Insolvency and Re-Entrepreneurship law of 2014). A second case study analyzes data collected this year on training provided to public officials and users of business and land registries. The study finds that mandatory and annual training for relevant officials is associated with higher business land registry efficiency. Two other case studies focus on the benefits of accrediting electricians and training customs clearance officials.
The full report and its datasets are available at www.doingbusiness.org