Profit Sharing
In Chile, payments for participating in company profits are known as gratifications and are required by law.
There are two systems outlined in the Labor Code and it's laws:
30% of net profits divided among employees based on their annual salary, calculated using the tax netting results from SII, minus 10% of the employer's shareholder equity for interest.
25% of the employee's annual income, with a cap of 4.75 minimum monthly wages (approximately 2,048 USD a year).
Employers and employees can agree to a schedule that exceeds the legal limit as long as it is more favorable to the employee.
These payments are considered taxable income for the employee and deductible expenses for the employer.
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