Chile approves tax measures aimed at boosting investment and economic growth

On July 21, the Chamber of Deputies approved, in its third constitutional reading, virtually all of the amendments introduced by the Senate to the Bill for National Reconstruction and Economic and Social Development. The bill is therefore expected to become law.

Below is a summary of the main tax measures contained in the bill as approved at the end of the legislative process.

1. First Category Tax (“IDPC”) also known as “Corporate Income Tax” and Tax Integration

• Gradual reduction of the IDPC rate: the general regime rate will be reduced from 27% to 23%, as follows:

   

  
  
  
   

• Full integration of the tax system: the distinction between credits with and without an obligation to reimburse is eliminated, allowing 100% of the IDPC to be credited against final taxes. This applies as from January 1, 2027, on a phased basis (30% reimbursement in Tax Year 2028, 20% in Tax Year 2029, and 0% as from Tax Year 2030), thereby equalizing the taxation of capital income and employment income.

2. Capital gains

• Elimination of capital gains tax on the disposal of securities with stock market presence: as of January 1, 2027, the 10% flat tax on capital gains from disposals of securities with stock market presence is eliminated, restoring the regime prior to Law 21,420 (gains not constituting income).

3. New tax credits

• Credit for the export of knowledge-based services in the digital economy: a new credit against the IDPC is created, equal to 15% of the remuneration paid to workers involved in providing knowledge-based services classified as exports by the National Customs Service and rendered to persons without domicile or residence in Chile. The credit may not exceed 75 UTM (approx. CLP 5,600,000; USD 5,600) per worker per commercial year. The credit is non-refundable but may be carried forward to subsequent years.
• Credit for catastrophic illnesses (Art. 33 quáter): a credit against the IDPC of up to 150 UTM (approx. CLP 10,700,000; USD 11,300) per worker, for the entire duration of the employment relationship, is established for employers that finance treatment of catastrophic illnesses affecting their dependent workers or their children aged 25 or under, spouse, or civil partner.

4. Substitute tax on accumulated profits

• 10% substitute tax on profits accumulated in the FUR and STUT registers and on excess withdrawals: companies with balances in the Reinvested Profits Fund (FUR) or in the Total Balance of Taxable Profits (STUT), or with excess withdrawals from the former Taxable Profits Fund (FUT) pending allocation, may elect to pay a 10% substitute tax, with no entitlement to associated credits, within 8 months following publication of the law. The amounts taxed will be transferred to the Exempt Income Register (REX) and may be withdrawn with priority over other income still pending final taxation. The substitute tax may be applied to balances as of December 31, 2025 or 2026, as applicable.

5. Voluntary and extraordinary system for declaration of assets and income abroad

• Taxpayers domiciled, resident, or incorporated in Chile may voluntarily declare to the SII (Internal Revenue Service) their assets and income located abroad, subject to a single substitute tax of 10% on their market value at the date of the declaration. The regime covers assets acquired before January 1, 2026 and income accrued up to that date which, although taxable in Chile, was not duly declared or taxed. The application deadline is 12 months from the first day of the third month following publication of the law. Taxpayers who reliably demonstrate the effective repatriation of such assets and income to Chile and who invest them in the country for at least 5 years may benefit from a reduced rate of 7%.
• Income obtained abroad that was not subject to tax in Chile may also benefit from this regime – for example, because it was not received in accordance with the rules of the Income Tax Law or because Article 41 G did not apply — that is, income that is not in a situation of tax non-compliance. In this case, the taxable base of the flat tax is limited to the income (and does not extend to the underlying assets), and the taxpayer must effectively bring that income into the country and invest it in Chile for at least 5 years, at a rate of 7%.

6. VAT and real estate sector

• Temporary VAT exemption for 1 year, counted from the month following publication of the law, on the first sale of new dwellings (including parking spaces and storage units sold together with the dwelling) that obtained final municipal acceptance before such publication. Transfers between related parties are excluded. These sales will not be taken into account for purposes of input VAT proportionality. The exemption may also apply to purchase and sale agreements executed between the date of submission of the presidential message that initiated the legislative process and the first business day of the month following publication of the law.
• 5% flat tax on the lease of DFL 2 dwellings: a new 5% flat tax regime is created on rental income from affordable housing, as from the third property (area ≤ 90 m²), applicable to both individuals and legal entities. Legal entities must have an exclusive corporate purpose consisting of the lease or use of affordable housing.
• A 100% property tax exemption is established for individuals aged 65 or older in respect of their primary residence (a single dwelling nationwide). Requirements include an annual sworn statement and verification by the SII, and penalties apply where the benefit is improperly obtained (a fine of 300% of the evaded tax and loss of the benefit for 10 years). The deceased’s estate retains the benefit for 3 years, and a surviving spouse or civil partner over 65 who resides in the dwelling retains it indefinitely.

7. Donations

• Exceptional 50% reduction in the donation tax rate for donations made within 1 year from the first day of the month following publication of the law.
• Only the assignees of forced heirship shares (legítimas) and of the improvement quarter (cuarta de mejoras) of the donor may benefit, in the proportion determined by the donor.
• In no event may the value of the donated assets exceed 50% of the donor’s total net worth.
• Prior donations are not accumulated for purposes of determining the applicable rate.
• The judicial approval requirement (insinuación) is eliminated.
• The notary may only authorize the deed upon proof of payment of the tax.
• The donee may finance the tax through loans or promissory notes granted by the donated companies or their related parties, without application of Article 21 of the Income Tax Law (denominated in UF and with a maximum repayment term of 10 years). If those companies incur debt in order to grant the loan, the interest on such debt will not be deductible as an expense.
• If the donee disposes of the asset within the following 3 years, its tax cost will be the lower of the donor’s cost and the cost that would correspond to the donee under the general rules.

8. Tax stability

• Tax stability regime for investments equal to or exceeding USD 50 million: a new tax stability regime is established for investments in strategic sectors such as mining, energy, infrastructure, industry, telecommunications, forestry, and research and development, among others, through the execution of a contract with the State of Chile. The term varies according to the amount invested (10 years for USD 50-100 million; 15 years for USD 100-350 million; 20 years for USD 350 million or more) and is counted from the commencement of the project’s operations.
• The benefit consists of keeping unchanged, in respect of the investment covered by the contract, the tax rules in force at the time the contract is executed. In consideration for that stability, the company benefiting from the regime must bear a 1.5% surcharge on the IDPC rate applicable to the income protected by the contract.
• Local investors that meet the same requirements as foreign investors, where applicable, may also benefit from the tax stability regime.
• The matters stabilized as of the date of execution of the relevant contract include, among others, the rate, taxable base, and other elements of the tax, the VAT and customs duty regime applicable to imports of capital goods, and the Internal Revenue Service (SII) interpretations regarding depreciation regimes, loss carryforwards, and organization and start-up expenses. In mining, stability of the royalty and protection against more burdensome changes to exploitation and exploration concession fees are also maintained.
• The regime takes effect on January 1, 2027 or on the date the law enters into force, whichever is later.
• The regime includes arbitration as a dispute resolution mechanism and a periodic review every 3 years.
• This measure is currently the subject of a constitutional challenge before the Constitutional Court, which is pending resolution.

9. Payment facilities for overdue tax debts and training tax credit (SENCE)

• Payment facilities for tax debts due on or before December 31, 2025, available for 180 days from publication of the law to individuals and micro, small, and medium-sized enterprises. Beneficiaries may obtain forgiveness of up to 100% of interest and 80% of penalties for a lump-sum payment, or up to 95% of interest and 75% of penalties under an installment agreement of up to 48 monthly installments, with a minimum down payment of 10% of the principal. A maximum of 3 agreements per taxpayer is permitted.
• Municipal debts (business licenses, sanitation fees, vehicle registration fees) accrued between 2023 and 2025 may be regularized with a forgiveness of 100% of interest and penalties, including debts under judicial collection but without a final judgment.
• The training tax credit is reduced from 1% to 0.7% of annual taxable remuneration. Purely recreational activities that do not develop verifiable job skills are excluded from the credit, as are courses delivered exclusively through self-instruction without the effective participation of an instructor. New differentiated coverage limits are established according to the worker’s remuneration bracket.