1. What is a Free Trade Zone?
2.What is the Free Trade Zone legislagtion in Chile?
- Decree-law (D.L) No. 1.055/75: authorizes the establishment of Zones and Free Trade Zone Deposits.
- Treasury Decree (D.H) Nº 1.355/76: Zones regulations and Free Trade Zone Deposits.
- Free Trade Zone Nº 2/2001 : approves the revised, coordinated and systematized text from the Decree with Force of Law (DFL) No. 341/77 from the Treasury Ministry.
- Law Nº 18.110/82: Regarding the entry and exit of national and nationalized goods in the Free Trade Zone.
- Law Nº 18.211/83: Article No. 11, Free Trade Zone sole tax (0,58% of – cost insurance freight – CIF).
- Law Nº 19.946/2004: Creates the Extension Free Trade Zone, Aysén Region and Palena Province.
- Treasury Decree No. 275/76: Fixes the limits and Extension Zone limits. Delegates to the Regional Intendent.
3. What are the main features of the Punta Arenas Free Trade Zone?
The Punta Arenas Free Trade Zone (FTZ) started up in 1977 and is the most important business platform of the Chilean and Argentinean Patagonia. In its more than 53 hectares (130 acres), along with its extension zone, a strong commercial, trading and industrial activity is carried out, where currently more than 960 users perform diverse actions, such as: imports, exports, purchasing, storage, exhibition, transformation, packaging, processing and marketing, receiving more than 9,6 million visitors per year, with total sales exceeding US$ 300 million annually. It is located in a privileged geographical position, adjacent to the main cargo port of Punta Arenas and expedited connecting roads to the region. The Complex employs over 1.600 people and has diverse facilities like money exchange, banks and customs agents.
4. Who runs and manages the Free Trade Zone?
As stated in the Concession Contract held by public act before the notary Edmundo Correa Paredes, dated May 29, 2007, No. 1059-07, and the text revised and final held by public act dated July 13, 2007, No. 1419-07, it is SRI Ltda., and since August 10 of 2007, the current franchisee, administrator and operator of the Punta Arenas Free Trade Zone for a period of 23 years. ZonAustral, SRI, is part of Fischer Group, a diversified conglomerate which has invested over the last 5 years around US$115 million in Punta Arenas for the development of the Free Trade Zone and the Hotel & Casino Dreams, creating new poles of commercial, trade, social and touristic development.
5. What kind investment have been developed by the new franchisee SRI?
Since SRI took over of the concession of the franchise, has invested in the FTZ around US$12 million, which results in:
- New perimeter fence.
- New public warehousing and dry storage.
- New headquarter building and Customs Administration facilities.
- New Customs warehouse.
- New vehicle storage yard.
- New cold storage warehouses.
- Shopping Center upgrade.
- New building and ice rink.
- New access Av. Bulnes and new parking lot.
- New visitors access Av. Costanera.
- Enabling cargo access in North entrance.
6. What have been the SRI payments to local government, according to the contract?
The new FTZ Concession Contract includes high social redistribution elements, as it ensures 28% of the gross income received by the Franchisee to be paid annually to local Government, adding it to their annual regular budget in order to develop public projects for the community. Thus, SRI has contributed to local Government, in the first 5 years of the franchise, near US$18 million, between the down payment and the annual payments.
7. What are the features of the Punta Arenas Free Trade Zone Complex?
- Total area of 53 hectares.
- 80 private warehouses and stores with over 150.500 m2.
- Shopping Center with over 100 shops (14.000 m2), includes an ice rink, entertainment areas, food court, cafes, etc.
- New vehicle storage yard with an area of 2 hectares.
- Cold storage for app 1.800 tons (0 º / -18 º C)
- Modern public warehouse stores with 3.400 m2.
- 31 available lots for construction, with 34.800 m2 available.
8. What is the main function of the Free Trade Zone?
The main function of the Free Trade Zone is to achieve trade facilitation in terms of imports, proposing cheaper foreign products to domestic industry and consumption. Objective: To promote the development and quality of life of the areas of the country, because of the increase of freight costs, making the trade less competitive and to consumers unattractive.
9. Is the Punta Arenas Free Trade Zone Commercial or Industrial?
As indicated in the Free Trade Zone Law, the Punta Arenas Free Trade Zone is both commercial and industrial, as art. 8 DFL Nº 2/2001 states: “goods entering FTZ may be subject to the acts, contracts and transactions as follows, set forth exemplary purposes only: Deposited for self purpose or third party Displayed Unpacked Packaged Packed Tagged Divided Repacked Marketed Only in the Free Trade Zones (in-site) may also be other processes such as: assembly, mounting, finishing, integration, manufacturing or industrial processing.”
10. Is integration of imported and domestic raw materials allowed?
The integration of domestic and imported raw materials can be done within the Free Trade Zone, as Art. 10 bis DFL Nº 2/2001 provides: “ Sales of goods manufactured or processed from raw materials or nationalized local inputs that do not exceed 50% of the total components of the final product.”
11. What is the tax and customs regime?
The tax regime for Users involves the following exemptions (Art. Nº. 23 of DFL Nº 2/2001):
- Income Tax (current rate of 24%)
- Value Added Tax (IVA, currently 19%)
- Credit for partners and shareholders, 50% against the Global Complementary Tax or the Additional Tax (from January 2017).
The customs regime for Users involves the following exemptions (Art. Nº. 24 of DFL Nº 2/2001):
- While the goods remain in the Free Trade Zone, they will be treated as if they were abroad and therefore, they will not be subject to any duties, taxes, fees and other charges collected through Customs.
- May enter the Free Trade Zone under the same custom regime, machinery designed to perform any of the processes referred in the Free Zone Decree Law, as well as those for the transport and handling of goods, fuels, lubricants and spare parts required for maintenance.
12. What is the Free Trade Extension Zone?
It is the region located immediately adjacent to the Free Trade Zone, including the Region of Magallanes and the Chilean Antarctica, with all its provinces. Since November 2004, as established by Law Nº. 19.946, it has been incorporated the Aysen Region, with all of its provinces, and the Palena Province, located in the southeastern end of the Lake District. The people, companies and institutions located in these areas may acquire goods under the franchise. Since 2008, the franchisee keeps operational offices in the city of Coyhaique, and since 2011 in the city of Chacabuco, which allow an optimal flow of attention to the needs of the Extension Zone.
13. How does the franchisee works in the Aysén Region?
SRI support an office and staff in the city of Coyhaique, located in General Parra No. 21, Tel 56-67-2246300, open from Mon-Fri 8:30 to 12:30 and 15:00 to 19:00 14. We also operate in Puerto Chacabuco, at Emporcha building, Monday and Tuesday 14:30 to 18:30. Contact Aysen Region: email@example.com
14.What is a Documentary Entry?
When it comes to goods whose dimension, volume, type, nature or any other condition, disproportionately increase the transportation costs, the User will be able to request to Customs to authorize the Documentary Entry, without the goods to enter physically to the complex. The Extension Zone, by definition, is operated under Documentary Entry, therefore, the goods are supervised on site.
15.How to be a Free Trade Zone User?
- Public Warehouse User
- Yard and esplanade User
- Warehouse and yard User
- Construction site User
- Store (shopping center) User
16. What is Direct Entry?
Direct Entry is the process by which the goods enter Free Trade Zone and leave it within the next 24 hours to its destination, maintaining the transport. This method allows reducing operating costs, primarily for storage and transportation.
17.What are the rates of the Free Trade Zone?
Punta Arenas Free Trade Zone rates are contained in Article No. 125 of the Internal Operations Regulation, and summarized as follows: – Rates
18. Can be sold within the Free Trade Zone national or nationalized goods?
Law No. 18.110/82 introduced the procedure of entry and exit of national or nationalized goods to the Free Trade Zone as follows: “May enter the Free Trade Zones national or nationalized goods of all kinds. Sales of these goods shall be considered exports only for tax purposes under the Decree Law Nº 825/74. National or nationalized goods entering the FTZ may be subject to the acts, contracts and operations referred to in Art. 8 DFL Nº2/2001, or used and consumed in the respective Trade Zone. Sales of such goods may be made only by wholesale to dealers who purchase them for vending or industrial production processes and for amounts exceeding 95 UTM, each time at the date of transfer.
19. Can a store under the general tax regime (VAT included and income tax) work within the Free Trade Zone?
Nowadays in Free Trade Zone it is allowed to develop trade and sales under the general tax regime (VAT included sales and income tax), same way as any trader, business or service would operate outside Free Trade Zone. This is how within the complex we can find kiosks, service companies, banks, money exchange agencies, food courts, coffee shops, entertainment areas and stores. Authorization for such type of operations is contained in the Customs Resolution Nº 1.834/2003.
20. May imported second hand goods enter the free Trade Zone?
It is allowed to import and sale second hand goods in Free Trade Zone franchise, although there are some restrictions when trading imported second hand goods within the Shopping Center according to Internal Operations Regulation. The second hand goods can be commercialized in stores outside the Shopping Center and in operations with Direct or Documentary Entry. Examples: clothing, machinery, vehicles, spare parts, supplies, among others.
21. What kind of merchandise can access the Free Trade Zone?
The Article 7 of the Free Trade Zones Law provides: “may enter the FTZ all kinds of goods, whether or not included in the list of prohibited imports, except for weapons or their parts and ammunition and other species that violate morals, good customs, health, plant or animal health, or national security. “
22. Can a foreign company become a Free Trade User?
To be a free Trade User you must sign a User Agreement or Contract. It must be signed as a company in Chile under the figure of Corporation, General Partnership, Limited Liability Partnership, Limited Partnership, Share Company or by setting up a Chilean branch or agency of a nonresident foreign corporation.
23. What type of agreements or contracts are available?
- Public Warehouse User
- Yard and esplanade User
- Warehouse and yard User
- Construction site User
- Store (shopping center) User
24. What are the franchisee`s new projects?
- Commercial stores (1.200 m2)
- Movie theaters
- Bowling (6 lanes)
- Playgrounds (children up to 8 years)
- Multicultural room
The project implies a 31% increase of useful area of the Shopping Center; this area will be located in the so-called Manzana 1, immediately to the west of the ice-skating rink, and with direct access to the West Access and the parking lot. – Adimark
25. As a resident of the Free Trade Extension Zone, if I move out of the territory, can I take the goods purshased in the Free Trade Zone to the rest of the country?
Yes, Article Nº 35 of Law 13.039 favor residents of the regions where there is a Free Zone who move permanently to the rest of the country, if they meet the requirements, can carry species of their property acquired during their stay in the area, which include a motor vehicle purchased at least two months prior to the date of transfer. – Article Nº 35
26. If I own a vehicle entered by the Free Trade Zone, can move or travel to the rest of the territory and under what conditions?
Yes, it can be made, and you must obtain a transit permit. This is a document issued by Customs that enables the resident in regions where there is a Free Zone, in order to get to the rest of the country, for up to 90 days each calendar year.
27. I am a resident in the rest of the territory and I travel to a city with a Free Trade Zone, which is the amount I can bear to leave the region, with goods purchased in the Free Zone?
Travelers may enter the rest of the country, released of duties and taxes, including VAT and other taxes, goods up to customs worth of US$ 1.218.
28. Can goods be exported from the Free Trade Zone and what is a re-expedition?
Goods can be exported from the Free Trade Zone by a re-expedition, which is a “customs destination” by which Free Trade Zone User can export goods abroad or to another Free Trade Zone. You can redirect both, foreign goods stored in Free Trade Zone as well as those goods which have foreign supplies incorporated. For example, goods can be sent from Punta Arenas Free Trade Zone to Iquique Free Trade Zone, and vice versa.