Leasing in Chile

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State of the market:

The profitability of leasing is higher in Chile than many of the other business segments. Therefore, many investors are seeking out these high returns and new leasing companies are being formed. This growth is driving maturity and competitiveness within the industry. Return on equity was 23.5% in 1994 and 21% in 1995.

Chile is experiencing a solid growth in their GNP. This growth is generating high levels of new equipment purchases. Leasing companies in Chile were expecting portfolio growth in excess of 10% in 1996 and 1997.

The primary markets in Chile are transportation, real estate, machinery and office equipment. Growth in 1995 was 30% with a market penetration of 21.1%.

Leasing was initiated in Chile in 1977; IFC participated in the equity of a company Leasing Andino in 1990.

Leasing association:

Chilean Leasing Company Association
Paseo Ahumada 179, Piso 7, Santiago
Chile

Law and regulations relating to leasing:

Leasing is not regulated under specific law but is covered by general commercial and civil code.

Leasing companies set up as bank subsidiaries are regulated by the Superintendency of Banks and Financial Institutions.

Bank-subsidiaries were initially blocked from participating in sale and leasebacks, automobile leasing etc. However, gradually, these restrictions have been eased out leaving hardly any distinction between bank subsidiaries and independents.

Cross-border leasing is also allowed now.

Taxation laws accept the lessor's ownership of the asset and allow depreciation to the lessor and rental expensing for the lessee.

Accounting:

Chilean Association of Accountants adheres to the US accounting standards and material provisions of FASB 13 are adopted in the country.

Relevant links:

 

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