Chile: UF and UTM, what are these 2 acronyms?

Let's talk a bit abount Unidad de Fomento (UF) and Unidad Tributaria Mensual (UTM), two indicators you must know.

In Chile, you will hear about two indicators, UF and UTM. Each of them corresponds to an amount in Chilean pesos.

Let’s have a look at them:

UF: Unidad de Fomento

UF means “Unidad de Fomento”. It is is an official indicator managed by the tax authority, initially developed for the real estate sector. This index is updated on a daily basis. You can find its value on the website of the tax department.

It is the indicator used by private companies to allow the cost of their services to be automatically adjusted for inflation.

A few examples of situations where you are likely to face it:

  • Buy/sell/rent real estate properties (flats/houses/offices)
  • Bank fees, often expressed as a percentage of UF. For example 0,0025 UF to download a bank statement
  • Cost of mortgages
  • Subscriptions to online services

Unidad Tributaria Mensual (UTM)

UTM means “Unidad Tributaria Mensual”. That’s the equivalent of UF, but for the administration. It is also an official indicator managed by the tax authority, yet updated on a monthly basis. Like the UF, you can find the value of the UTM [on this page]https://www.sii.cl/valores_y_fechas/uf/uf2022.htm) of the tax department’s website.

You can find it notably in the following cases:

  • Definition of income ranges used to calculated income tax
  • Fine to pay to an administration
  • Brand registration with INAPI

And more generally, in most situations where you have a “financial transaction” to perform with an administration.

You may encounter (more rarely) another acronym, the UTA, which means Unidad Tributaria Anual. You can easily calculate the UTA by multiplying UTM by 12.

In practice

The actualization mechanism is defined by law, and values of these indicators are public, so no worries.

Two things to have in mind:

  • If you sign a contract with a payment to do, always check the value used. To see if it is actually the up-to-date value of the indicator.
  • When you need to pay in UTM for legal/administrative steps, try to complete the process quickly (like no more than 2-3 weeks). Otherwise, by the time you finish the administrative process, the value will have moved. The administration will ask you to go back to the bank to deposit the difference between the value that you paid initally and the current value.

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