Top 5 South American Countries with Low Corporate Tax for Foreign Investors

As British businesses navigate a world of post-Brexit regulations and domestic inflation, expanding overseas is a strategic move for many. 

South America, with its abundant resources, growing economies, and increasingly business-friendly environments, presents exciting opportunities. 

One key factor attracting foreign investment is the presence of several countries with low corporate tax rates. The UK government’s announcement to raise corporation tax to 25% in April 2023 makes South America even more attractive.

Here’s a look at the top 5 South American countries with favourable corporate tax rates for foreign investors.

Paraguay (10%)

Paraguay boasts the lowest corporate tax rate in South America – a mere 10%. This makes it a highly attractive destination for businesses looking to minimise their tax burden. The country is also undergoing a period of economic stability and growth, with a focus on attracting foreign investment in sectors like agriculture, manufacturing, and construction. However, it’s important to consider Paraguay’s smaller domestic market compared to other South American nations.

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Chile (27%)

Chile has a long history of political and economic stability, making it a popular choice for foreign investors. The corporate tax rate in Chile is 25-27% (depending on the size of your business). Additionally, Chile benefits from a robust free-trade agreement network, opening doors to wider markets. Keep in mind that Chile’s tax system can be complex, so seeking professional guidance is recommended.

Uruguay (25%)

Uruguay offers a corporate tax rate of 25%, putting it right around the new UK rate. However, Uruguay boasts several advantages. The country has a highly skilled workforce, a strong legal system, and a transparent business environment. Additionally, Uruguay offers tax breaks and incentives for businesses in specific sectors like technology and tourism.

4. Peru (29.5%)

With a corporate tax rate of 29.5%, Peru might seem less attractive at first glance. However, the country offers a large and growing domestic market, a strategic location on the Pacific coast, and abundant natural resources. Peru is actively seeking foreign investment in infrastructure, mining, and renewable energy sectors, and often provides tax breaks and exemptions for these industries.

Colombia (30%)

Colombia’s corporate tax rate of 30% is the highest on this list. However, the country has made significant strides in recent years to improve its business environment and attract foreign investment. Colombia boasts a large and young consumer base, a strong focus on innovation, and a strategic location connecting North and South America. Additionally, the government offers tax incentives for businesses in specific sectors like manufacturing and tourism.

Beyond Tax Rates

Remember, tax rates are just one factor to consider when expanding to South America. Political stability, infrastructure, access to talent, and regulatory frameworks all play a crucial role. Conducting thorough research and due diligence specific to your industry and target market is essential for success.

By carefully considering tax implications alongside these other factors, you can make an informed decision about which South American country best suits your business needs.

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