CHILE Trends and Developments Contributed by: Patrick Humphreys and Paula Lühr, Garnham Abogados
The National Reconstruction and Economic and Social Development Bill: A Policy Reset with Regional Significance Chile is in the middle of its most ambitious economic reset in a decade. The National Reconstruction and Economic and Social Development Bill – tabled by President José Antonio Kast in April 2026 and quickly dubbed the “mega-reform” – gathers more than 40 measures across tax, housing, employment, environ - mental permitting and institutional reform into a single legislative vehicle. On 20 May the Chamber of Depu - ties passed it in general (principle stage) and in par - ticular (article-by-article stage). In the Senate, a more fragmented chamber means the debate is likely to run well past the government’s original June timetable, with several provisions still under discussion. For anyone weighing up Chile from abroad, it is not only the tax cuts alone that have grabbed the head - lines. Rather, it is the attempt to move several levers at the same time: corporate tax, capital mobility, housing demand, labour costs, permitting timelines and fiscal discipline. And this is not a rescue mission. Chile drew net foreign direct investment of around USD14.5 billion in 2025, up roughly a tenth on the year, with inflows averaging some USD16 billion a year over the past five. The bill is aimed not at an investment drought but at the structural frictions that have stopped solid fundamentals from converting into faster growth. The macro backdrop: why now Growth has disappointed since the mid-2010s. Hav - ing run comfortably above 4% a year in the previous decade, it has since settled into the low single digits, and the OECD’s December 2025 Outlook trimmed its 2026 forecast for Chile to 2.2%, even as it marked up its projection for fixed capital formation. The diagnosis is by now familiar: weak productivity, and too much friction in the path of investment. The government has been careful to attach a fiscal counterweight to the giveaways. Alongside the bill sit spending cuts of roughly 1.2% of GDP – a 3% across- the-board trim to ministerial budgets plus around USD1 billion in cross-ministry savings – and ministers have leaned hard on the message that consolidation is part of the growth plan rather than an afterthought. The Autonomous Fiscal Council is likely to be quoted
often during the Senate stage, while the credibility of the whole package will hinge on whether those sav - ings actually materialise. Why the bill has investors’ attention None of this happens in a vacuum, and Chile starts from a strong base, underpinned by OECD member - ship, a rule-of-law record that sits at or near the top of the region, investment treaties with 37 countries, CPT - PP membership since February 2023 and vast copper and lithium reserves that all keep international capital interested. The bill’s task is to turn those advantages into something investors feel day-to-day: lower rates, clearer rules and less time lost to bureaucracy. Chile still carries one of the steadier institutional repu - tations in Latin America. But over the last few years, investors have had to factor in slower growth, gla - cial permitting and a recurring, occasionally anxious, national conversation about whether the tax system was about to change yet again. The bill tackles these worries head-on, pairing a lighter tax burden with measures meant to reduce administrative bottlenecks and make the rules more predictable. It is aimed less at one-off deals than at groups thinking about Chile as a base for regional operations. When a capital allocation committee compares jurisdictions, the headline rate is only the start of the conversa - tion. They also want to know how quickly a permit can be secured, how likely the rules are to hold, whether headcount can grow at a cost they can forecast, and whether local capital and property markets offer a clean way out later. This bill seeks to address each of these concerns at once. It also helps to remember that the measures do not land evenly. Developers and housebuilders are drawn to the VAT relief and the demand-side incentives; labour-heavy operations look hardest at the employ - ment credit; mining and energy groups care most about tax stability and permitting; and financial inves - tors tend to fix on capital-gains treatment and the win - dows to regularise offshore assets. The same bill may be read very differently depending on where you sit.
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