Avoiding the Value Added Tax in Hotels

     There are a shrinking number of benefits these days to having an American passport and, although European passports are much better, they too can provide some unpleasant side effects in certain hostile countries. Sometimes, these passports require extra taxes Americans, Canadians, Albanians, Mexicans and Australians all get the privilege of paying the “reciprocity fee” at the Santiago airport (up to US$160), which is good for the life of the passport. So that fact is not a stellar benefit by any means. Applying for residency in Chile is also much more expensive for Frenchmen and Englishmen (and many others) than it is for Americans (which is very cheap). These added fees are tantamount to another tax.

     However, one thing that foreign travel documents can do for you in Chile is get you a 19% discount on the room rate in hotels. But be careful. Merely showing the passport at check-in alone is not enough, and the check in clerk will likely not tell you all that is required, Because the hotel can deduct expenses against the value added tax (IVA), a portion of the tax becomes a form of revenue for the company. So they do not have much incentive to inform customers of the national policy. In order to deduct the IVA you must do the following: (1) show the foreign passport, and many places will likely want to see your entry stamp in the passport or on the little paper you get at the airport to make sure that you are not really a resident of Chile masquerading as a tourist, (2) tell them that you want to have your rate exempt from IVA and (3) tell them you want to pay your bill in dollars, not pesos, even if by credit card. If you do not do all of these things you will likely not get the discount. Also note that in smaller establishments the owners are often ignorant of the legislation that exempts foreigners from paying IVA at hotels. In those places you will probably be stuck paying the tax.

     Chile has a new sustainable community starting called Freedom Orchard. Check it out. Invest in it, and diversify out of the decaying assets in “First World” nations. Also, be sure to tune in to Dr. Cobin’s radio program: “Red Hot Chile” at noon (ET) on Fridays on the Overseas Radio Network (ORN). You can login at www.overseasradio.com. You can also join the thousands of other people who download the shows each month via the link provided on the ORN website (recorded show updated every Monday morning). Be sure, too, to visit www.allaboutchile.com for discussion and forums about the country.
     Dr. Cobin’s book, Life in Chile: A Former American’s Guide for Newcomers, is the most comprehensive treatise on Chilean life ever written, designed to help newcomers get settled in Chile. He covers almost ever topic imaginable for immigrants. This knowledge is applied in his valet consulting service (see http://www.chile-consulting.cl), where he guides expatriates through the process of finding a place to live and settle in Chile, helping them glide over the speed bumps that they would otherwise face in getting their visas, setting up businesses, buying real estate, investing in Chilean stocks or gold coins, etc. The cost is $49. If you have problems getting the book through the www.escapeamericanow.info or Overseasradio.com site, since the ORN Store is sometimes closed for maintenance, please use the PayPal info noted below.
     Dr. Cobin’s sequel book, Expatriates to Chile: Topics for Living, adds even further depth on important topics to expatriates who either live in Chile already or who have Chile on the short list of countries where they hope to immigrate. The book deals with crucial issues pertaining to urban and rural real estate transactions, natural disasters, issues pertaining to emigration and its urgency, money and the quality of life, medical care and insurance, business opportunities, social manifestations (including welfare state and divorce policy concerns), Chile in the freedom indices, social maladies (lying, cheating, stealing and murder), as well as discussion of a few places worth visiting and some further comments about Santiago. Note: If the link to buy the book at the www.escapeamericanow.info or Overseasradio.com site does not appear, since the ORN Store is sometimes closed for maintenance, just send US$39 by PayPal to jcobin@policyofliberty.net and send an email or PayPal notice that you have completed your order. A download link will be sent to you directly. 
    The www.escapeamericanow.info and Overseasradio.com websites also have Dr. Cobin’s abridged book (56 pages): Chile: A Primer for Expats ($19), or the little book can also be obtained directly by following the aforementioned PayPal steps.

A Primer on Modern Themes in Free Market Economics and Policy  (2009)