CHILE Trends and Developments Contributed by: Patrick Humphreys and Paula Lühr, Garnham Abogados
The bill’s architecture: five pillars It helps to read the bill as five pillars, each touching a different part of the investment decision. • Reconstruction – roughly USD400 million flows to the regions worst affected by the 2024-2026 wildfires, chiefly Valparaíso, Biobío and Ñuble. This is mostly a domestic fiscal measure, but it supplies the political urgency and cross-party support that help carry the wider package. • Construction and housing – a temporary VAT exemption on first sales of new homes, adjust - ments to the DFL 2 incentive regime (a tax incen - tive program for economic housing) and a new simplified rental income tax. • Formal employment – a tax credit of up to 15% of gross wages for lower-paid workers, usable against several tax liabilities. • Investment-focused tax changes – the headline corporate rate cut, a return to full integration, capi - tal-gains relief and a new 25-year stability statute. • Regulatory streamlining – reform of the environ - mental permitting process, building on the Frame - work Law on Sectoral Authorisations enacted in 2025. The breadth is intentional. Tax, permits and labour reforms rarely move together, their combined effect is likely to matter more than any single measure in isolation. Tax competitiveness: rate, integration and capital gains Tax is the densest part of the bill. The corporate rate – the impuesto de primera categoría – would fall from 27% to 23% in a phased reduction: 25.5% for 2027, 24% for 2028 and 23% from 2029, for large compa - nies and SMEs alike. This brings Chile closer to its regional peers and, over time, closer to the average corporate burden across OECD economies. The less prominent measures within the chapter may matter more. For foreign investors, the rate cut is the obvious draw, but full integration may matter just as much. Chilean tax has long been technically excellent and quietly exhausting to model; the semi-integrated regime introduced in the last decade made the effec - tive burden on distributed profits genuinely hard to
explain to a head office, especially if they are within a country with which Chile does not have a double taxa - tion treaty in force. A return to full integration removes some of that friction, which makes pricing a deal – and comparing Chile with Peru, Mexico or Colombia – a far more straightforward exercise. A third measure carries outsized symbolic weight: scrapping the 10% tax on capital gains from listed securities with stock-exchange presence, restoring their non-taxable treatment where they qualify. For portfolio investors, funds eyeing listed exits and any - one building equity positions locally, this lifts after-tax returns and should help deepen a market that has long been thinner than the economy warrants. A word of balance is in order. The same bill hands the tax authority sharper teeth, with broader powers to verify information and audit. The compliance climate therefore tightens even as the headline burden eases – an entirely familiar pairing, and a reason to put tax governance in order before, not after, taking up the new reliefs. The 25-year stability statute: echoes of DL 600 The provision likeliest to move the needle for large investors is a tax-stability mechanism consciously modelled on the old Decree Law 600, which framed foreign investment in Chile for decades until it stopped taking new entrants in 2016. Set out in Article 33 of the bill, the new instrument would let investors – foreign or domestic – committing USD50 million or more sign an investment contract with the state that locks in the applicable tax terms for up to 25 years from the start of operations. It is deliberately more generous than the current For - eign Investment Law (Law 20,848, 2015). That statute guarantees the essentials – non-discrimination, free repatriation of capital and access to the formal for - eign-exchange market – but stops short of contractual tax invariability. The proposed regime reaches further, covering the corporate rate and base, the mining roy - alty and its calculation, VAT on capital-goods imports and withholding on profit remittances – a wider perim - eter than DL 600 ever offered.
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