Navigating GCC family offices through Chilean pitfalls

For decades, the standard playbook for GCC investors was simple: stick to local markets or park wealth in the "safe" legacy capitals of London and New York.

But as the global economy enters a period of profound volatility, that strategy is being rewritten with a view to comply with regulatory and tax-efficient "hooks," shared Fernando Cerda, a Chilean legal expert in Shariah compliant structuring.

The common mistake of many Gulf-based investors parking money outside established Western centers isn't a lack of due diligence, but a lack of structured accounting for governance frictions, said this international legal advisory project director at Chile's 911 Servicios Legales.

As an example, treating legal structuring as a secondary issue in Chile can be costly. Fernando said investment documented simply as “financing” may fall under the legal framework governing credit operations that would recognize a ‘profit’, which introduces specific regulatory and tax implications.

“These technical details may appear minor at first, but in large-scale projects they can significantly affect real returns,” Fernando shared. “Large institutional investors are not only focused on returns; they are equally concerned with legal certainty regarding how and when capital can exit an investment.”

Notwithstanding that, Chile offered lower regulatory friction, greater institutional stability and a strong network of international treaties compared with larger Latin American markets such as Brazil or Mexico, said the 17-year veteran of deal structuring between Santiago and Dubai.

The treaty on avoidance of double taxation between Chile and the UAE, reinforced by the Comprehensive Economic Partnership Agreement (CEPA) that came into force in November 2025, provides an additional layer of assurance.

“For conservative institutional capital, predictability often matters more than market size.”

With non-oil trade between the UAE and Chile rising 7.1% in the first half of 2025, the narrative of Chile as a "distant, niche market" is rapidly dissolving, Fernando notes. He added that CEPA went beyond tariff reduction in streamlining framework for the "de-risking" of capital entering critical sectors like mining and energy.

The legal expert noted that working with Shariah compliant investment frameworks within a civil law jurisdiction like Chile wasn't just a matter of avoiding interest.

“If an investment structure is ultimately characterized as conventional financing under local law, it may fall under legal rules governing credit operations, which can conflict with the principles of Islamic finance.”