Law No. 21,745 modified the Sales and Services Tax Law (LIVS, for its initials in Spanish), creating a new simplified VAT (IVA for its initials in Spanish) taxation regime designed to facilitate the declaration of this tax for merchants who carry out activities in trade fairs. 

This is a new voluntary regime designed to replace the obligation to issue tax receipts and the requirement to determine, declare, and pay VAT through a monthly Tax Return Form 29. Therefore, it substitutes this obligation with the payment of 1.5% tax on each sale made by the trade fair vendor through electronic payments. 

It applies to fair traders, who are natural persons (not companies) who carry out activities in fairs¹ of “retail sale of food, beverages, and tobacco in stalls and markets (including street markets)” and/or “retail sale of other products in stalls and markets (including street markets)” and, who have a permit or license granted by a municipality² to perform such activities and have initiated activities before the Chilean Internal Revenue Service (SII, for its initials in Spanish). 

How does the new substitute tax work? 

To begin operating with this new substitute tax, there are two requirements: 

I) Be enrolled in the Trade Fair Taxpayer Registry³, which can be done directly on the Internal Revenue Service website, with their incorporation into the regime, becoming effective as of the month following registration. 

II) They must have an electronic payment media operator authorized by the Internal Revenue Service⁴ to receive payments for their sales. 

In compliance with the above, the sales made by the trade fair vendor through electronic payments will be subject to a 1.5% withholding (substitute tax). This withholding is performed by the electronic payment media operator, who is obliged to declare and remit the tax, leaving the street market vendor released from other tax obligations regarding VAT. 

In which status is the implementation of this regime? 

As a first stage, the Internal Revenue Service began receiving information from the municipalities regarding the permits or licenses granted to fair traders. Therefore, now will start receiving voluntarily registrations to join the regime and from payment media operators who want to operate with these vendors under this new simplified VAT regime. 

The regime is expected to start as of January 1^st, 2026. 

Other considerations 

• This regime only establishes a substitute tax for VAT; therefore, for Income Tax, the trader must perform tax compliance according to the regime under which they are subscribed. 

• The vendor must still issue a voucher or proof of payment. 

• Even though the fair trader loses the right to the VAT input tax credit charged on the purchase of supplies or merchandise for their activities, it must continue issuing tax documents. 

• The vendor may perform other complementary activities not subject to VAT. 

• Failure to comply with any of the requirements will empower the Internal Revenue Service to exclude them from this new regime. 

• The street market vendors who join this new regime will cease belonging to the SME (Pyme regime) established by the same LIVS. 

• For further instructions and guides, the Internal Revenue Service enabled a section on its website with infographics and Circular 64 of 2025. 

1. Refers to a group of retail vendors and independent workers who regularly or periodically sell food products of plant or animal origin and/or other goods within a defined area. 
2. Municipalities must report to the Chilean Internal Revenue Service (SII) the permits or licenses granted to street market vendors, as well as any changes to them, in accordance with Resolution No. 95 of 2025. 
3. The registration instructions were published under Resolution No. 179 of 2025. 
4. Vendors must be registered in the Electronic Payment Methods Operators Registry for Street Markets, as required by Resolution No. 178 of 2025.