I met one of the associate directors of Startup Chile last night at a Hackers & Founders event. These people are amazing. They are trying to revamp their economy by changing the culture, and to do that, they want to import startup culture. So, their government has set aside $100M over the next four years to get 1,000 startups to come to Chile for six months and work.
But even more than that, their vision is much larger. They want the program to become a success, so that other, less developed countries start similar programs. Their goal is to try and convince 10 other governments of developing countries to embark on similar projects.
They are trying to hack their economy. And... it's working.
I was shocked to heard that their applicant pool wasn't that large.
Also, they are willing to take people at the idea stage.
So, if you want to build your startup, and take part in one of the best economic hacks I've heard of in years... apply.
they get you 40k and u have to put in 4k from your own pocket (the 40k are in the form of reimbursements - u spend something, they give u back in the following month). U have to spend the 40k during the 6 months (can't spend it all in one month for instance) and of course, you have to spend it in business-related stuff, like salaries, software, marketing, etc (they won't reimburse coffee or if you buy a car!)
The contract you sign is very clear: there are no strings attached apart from having to keep someone here for 6 months and presenting reports to get the reimbursements. So it's no "free lunch" - it's just a great example of what governments could (and should) be doing with their money. It fosters innovation, that alone is a huge return of investment for the country..
disclaimer: I'm in StartupChile's first class of 2011 (Novelo team from Brazil) and LOVE, LOVE, LOVE it. I'd be here even if they offered ZERO dollars!
the contract. You can only take 350k pesos as a salary...
and when u contract services, they ask you for some sort of proof if the value is suspiciously large. So you can TRY subcontracting a friend in US and paying him 40k USD, no problem. I wouldn't expect it to go through unnoticed, though...
there's more discussion at http://www.quora.com/Startups-in-Chile/Would-you-develop-you... but in short there aren't that many catches - certainly no equity (i would guess that people here in chile realise 40k really isn't that much in american terms; the payoff is in the numbers and the culture, not taking a stake in your particular business)
[edit: also, getting a visa here is not hard. you don't need to win that grant to come here. i arrived on a tourist visa (3 months, renewable to 6), got a job offer, and within a week of the offer had permission to work. and none of that was illegal. do bring some kind of certificate indicating your level of education, though(!)]
Could you share some of your experiences working in Chile? Where did you move there from? Did you already know Spanish? Have you enjoyed living & working there?
i am here because my partner is a chilean academic with tenure here. in general, it's a good place to live. personally, i am not the most outgoing or relaxed person on the planet, and sometimes living in a different culture - and it could be any other culture - gets to me. but the only negative thing i can think of about living here is that the work culture in large companies (my first job) emphasizes hours over productivity. if i were coming here to run a startup i would use a more results-oriented working environment (i don't care if you work at home, but you fucking get stuff done) as an incentive. a lot of people really hate the enforced long hours.
you need to speak spanish. but people will be friendly and tolerant when you screw up. you can learn while you are here. a chilean lover is as good a way to learn as any ;)
PS - just thought of a negative (as i went outside). the winter air quality in santiago is terrible. if you have asthma you don't want to be coming here. another negative would be the differences in wealth, although i imagine that's more shocking to a european than an american (i have no idea why i am paying such low taxes compared to europe - why isn't more of what i earn being used to help the poorest people here?).
PPS - some positives: good food (you have no idea how good a hot-dog can be); good beer (really - it's exploded the last few years with a bunch of micro-breweries); a more entrepreneurial attitude than europe; a more sane social attitude than the usa; low crime rate (despite what people here seem to think...)
Should be noted, the taxes in Chile are not only lower than Europe, they are also lower than in the US unless you are a member of the ultra elite rich that has a team of tricky accountants who shuffle assets to remote islands to make sure you don't pay your share. How can they do it? Well they don't maintain a global imperialist war machine that costs trillions to maintain, nor do they give away trillions to criminal bankers.
I don't have an authoritative source, but I recently read that Chile assesses:
- Up to %40 income taxes
- A form of social security taxes
- taxes capital gains as income
- %17 corporate taxes
- %19 VAT Taxes (might have that and corporate reversed)
and, the piece de resistance:
- a %35 excise tax on taking money out of the country!
tax on earnings are listed here - http://www.sii.cl/aprenda_sobre_impuestos/impuestos/imp_dire... - and the 40% rate applies to earnings over $12,500 a month (it's banded). there are also incentives for investment that count against that (so you invest the money in a pension fund, say, then that lowers your effective wage for tax purposes, i think (not completely sure)).
the 35% tax is described here - http://www.sii.cl/portales/inversionistas/imp_chile/impuesto... - and applies to earnings of people who don't live or have residence in chile. so it wouldn't apply to someone under this grant. also, it's not in addition to other taxes (so it's 18% over VAT, if that would have been charged - again, this is just from skimming the docs).
[edit: you need to translate the fourth paragraph to understand the "additional" nature. here's a link in english http://www.thisischile.cl/frmContenidos.aspx?SEC=187&ID=... that says This tax applies to those who are neither residents nor residing in Chile and ranges between zero and 35% on total revenue depending on the type of income (e.g., for services, royalties, interest, transportation payments, insurance, capital gains, and dividend distributions). In the case of utilities, the “First Category” tax can apply as a credit towards the additional tax.]
in general, chilean laws and taxes are all described online. you don't need to post uninformed speculation - you can search for the details. disclaimer: i just skimmed the links, and am no expert, so my summary may be incorrect.
"Additional tax applies to income derived from Chilean sources by individuals or entities not domiciled or resident in Chile, where the income is available from Chile to the person residing abroad. Dividends, withdrawals and / or repatriation of profits by corporations, partnerships or permanent establishments of foreign companies are taxed at the general rate of 35% additional tax."
Note the word "additional". So, this implies after regular corporate taxes are applied.
So, you form a corp in Chile under this program, then you leave after 6 months. You're no longer a resident of chile. You want to take your companies profits out of chile, then this tax would be applied. Depending on the industry, and the corporate tax rate, it looks like it could be as much as %52! (%35 plus corporate taxes.)
This is actually one of the key indicators of a regime that you should be wary of. Currency controls are what governments impose when they find their policies are driving businesses out of the country. I'm not saying that is the situation in chile, I'm just saying that this is the historical role these kinds of taxes have played.
This tax, and the others I mentioned are confirmed by the links you gave, so it is wrong to claim they are "uninformed speculation". Turns out I was quite well informed!
"this implies after regular corporate taxes are applied... looks like it could be as much as %52!...Turns out I was quite well informed!"
since you appear to be relying on auto-translate, and don't understand the garbled 4th paragraph, i have added an english language link to my reply above. it is not in addition to corporate tax - that is a "first category tax" that can be used as a credit.
and if you want to leave chile, why would you leave the company here? you think you can run a startup from abroad? why wouldn't you move the company too? this is software. heck, you could even take the programmers with you - many young chileans would jump at a green card...
heh. that happens here too. i had someone come round trying to sell me some off-shore banking services here in chile. the "salesman" was the son of an english diplomat. i am from "normal" english stock. it was a socially uncomfortable meeting.
Apparently there's a pretty horrible form to fill out, but that's about it. I know a couple of people out there at the moment and it sounds like a pretty sweet deal.
But even more than that, their vision is much larger. They want the program to become a success, so that other, less developed countries start similar programs. Their goal is to try and convince 10 other governments of developing countries to embark on similar projects.
They are trying to hack their economy. And... it's working.
I was shocked to heard that their applicant pool wasn't that large.
Also, they are willing to take people at the idea stage.
So, if you want to build your startup, and take part in one of the best economic hacks I've heard of in years... apply.