CHILE Trends and Developments Contributed by: Patrick Humphreys and Paula Lühr, Garnham Abogados
For a large copper or lithium development the appeal is plain. A project that needs USD1.5-2 billion of capi - tal, international project finance and a 20-year produc - tion life depends on tax assumptions that must survive several elections. Locked-in terms are exactly what credit committees, export credit agencies and mul - tilateral lenders want to see before they close senior debt, and exactly what Chile has struggled to promise in recent years. One caveat has already emerged. During the Chamber debate the government signalled that it could trim the stability period from 25 to 20 years and raise the mini - mum investment threshold, leaving the detail to the Senate. The regime is a real opportunity worth build - ing into project planning, but its final shape – duration, threshold, the taxes it covers – is not yet fixed, and investors holding legacy DL 600 or other invariability rights will need to weigh how the old and new frame - works interact before opting in. Permitting reform: from bottleneck to bankable timeline If there is one area of the bill likely to resonate with investors and developers in Chile, it is permitting. Two reforms matter here, and they work as a pair. The first is already law: the Framework Law on Sec - toral Authorisations (Law 21,770, LMAS), published in September 2025. It overhauls roughly 380 permits spread across 16 ministries, imposes binding dead - lines on the administration and is projected to cut pro - cessing times by between 30% and 70%. InvestCh - ile has put the private pipeline under its watch at a record USD56.2 billion across 474 projects at the end of 2024, much of it committed but stalled – capital the reform is meant to release. The second is the reform of the Environmental Impact Assessment System (SEIA) inside the current bill. Even when sectoral permits come through quickly, environ - mental review has long been the real source of delay, capable of stranding a major project for years. So, the two reforms compound: faster sectoral permits only translate into faster spending if environmental approvals keep pace. For a greenfield mine, a wind farm or a transmission line, the combination could turn permit risk – for years one of the heaviest discounts
in any Chilean valuation – into something a sponsor can plan around, aligning construction with financing rather than guesswork. The catch is political. Anything that speeds approvals invites the charge of weakening environmental safe - guards, and the SEIA provisions have already drawn fire from green groups and several senators; opposi - tion deputies have even floated taking parts of the bill to the Constitutional Court. This is the corner most likely to be reworked, and the one worth watching most closely. Housing, real estate and construction Housing is where the bill bites soonest, and is a sector where foreign institutional money – real estate funds, residential platforms and development lenders – has been quietly building a presence. The residential mar - ket has had a rough few years: unsold stock piling up, affordability squeezed by higher interest rates and the special construction VAT credit scaled back since 2025. The proposed twelve-month VAT exemption on first sales of new homes, expected to run from the date the law is published, lets developers reduce effective prices and shift stock. Some analysis suggests the effective discount could land somewhere between 3% and 8%, depending on pass-through and input-VAT treatment – enough, in a price-sensitive market, to get sales moving and to rescue projects that were sitting just short of viable. Developers holding finished or near-finished units stand to gain most; those still early in the pipeline have more time to plan around the window. There is a technical sting worth flagging. Sales made under the exemption do not allow recovery of input VAT on construction costs, which instead gets capi - talised into the cost base. Whether the exemption actually helps a given developer therefore turns on its input-VAT position and how price-sensitive its buy - ers are – the sort of analysis that rewards running the numbers properly before deciding when to sell into the window. The bill also adds a flat 5% income tax on rental income from qualifying DFL 2 dwellings from the third
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