Article 107 of the Income Tax Law establishes a special tax regime for capital gains derived from the disposal of certain domestic financial instruments. 

In general terms, the capital gain corresponds to the profit obtained by an investor upon the sale or redemption of a financial instrument at a price higher than its acquisition cost, calculated in agreement with specific rules. This regime is currently being modified on two fronts. 

On the one hand, the National Reconstruction and Economic and Social Development Law, enacted on October 9th, 2026, and expected to be published in the Official Gazette in the coming days, changes the tax treatment applicable to such capital gains. On the other hand, the Capital Markets Reform Bill, submitted to the National Congress on September 9th, 2026, proposes to modify the requirements applicable to the instruments currently covered by the regime and extending the benefit to additional instruments, including certain foreign financial instruments. 

What changes with the Reconstruction Law? 

Currently, Article 107 covers the following instruments: 

• Shares of publicly traded corporations incorporated in Chile with stock market presence. 

• Units of investment funds with stock market presence. 

• Units of investment funds without stock market presence, provided certain conditions are met. 

• Units of mutual funds whose investments consist of securities with stock market presence and instruments referred to in Article 104. 

• Units of mutual funds whose own units have stock market presence. 

Currently, assuming that the specific requirements established by law for each instrument are met, the capital gain extracted from their disposal is subject to a 10% single tax, except in the case of institutional investors, for whom such gain already qualifies as non-taxable income. 

As of January 1st, 2027, the Reconstruction Law eliminates this tax, and the capital gain will become non-taxable income for all investors. The eligible instruments and the requirements for accessing the benefit remain unchanged. 

In this regard, the Reconstruction Law does not mean that all financial gains will become tax-exempt. The benefit applies only to the instruments and transactions covered by the provision, and only where the applicable legal requirements are satisfied. 

What changes under the Capital Markets reform bill? 

The bill replaces Article 107 in its entirety. With respect to the instruments currently covered by the provision, it modifies the following requirements: 

• Shares: The stock market presence requirement is replaced by a minimum 15% free float (shares not owned by shareholders holding 10% or more of the company’s capital, directors, executives, or their related parties). Transactions carried out on stock exchange segments intended for emerging or growth-stage companies would also qualify. However, a share with stock market presence but a free float below 15% would no longer be eligible. 

• Investment fund units: The requirements of stock market presence and investment in shares are eliminated. It is sufficient that the units are sold on an exchange, or redeemed through the liquidation or voluntary capital reduction of the fund, and that the fund’s internal regulations require the distribution of dividends and interest received. 

• Mutual fund units: The two current categories are consolidated, the stock market presence requirement for the units is eliminated, and redemptions are generally permitted. The fund must invest at least 90% of its portfolio in certain domestic or foreign publicly offered securities. For funds whose investments currently consist of securities with stock market presence, the rules become stricter: the requirement is deemed breached if the investment falls below that threshold for 30 days or more during a calendar year, additional distribution obligations are introduced, and the eligible portfolio no longer includes fund units. 

In addition, the bill incorporates the following new instruments: 

• Shares of closely held corporations and simplified joint-stock companies (SpA) incorporated in Chile, subject to the same requirements applicable to shares of publicly traded corporations. 

• Foreign publicly offered securities, including shares of foreign corporations, units of foreign mutual or investment funds, and Depositary Certificates. Among other requirements, these securities must be registered in the Foreign Securities Registry maintained by the Financial Market Commission (CMF, for its initials in Spanish), or be exempt from such registration, trade on a Chilean exchange and in Chilean pesos, and generate income that is distributed at least once per year. 

• Derivatives whose underlying assets consist exclusively of shares, fund units, or other securities that meet the requirements of Article 107, or bonds governed by Article 104, provided that the position is opened and closed on a Chilean exchange and that the underlying asset satisfies the legal requirements at the time the contract is entered into. 

• Endorsable mortgage loans, or securities representing such loans, traded on product exchanges supervised by the CMF or transferred to those exchanges for custody. 

Article 107 is a significant incentive for Chile’s capital markets and a key provision for individual investors, companies, family offices, and investment funds. It is intended to encourage investment, increase market liquidity, and contribute to the development of the local financial market. Its application can influence asset valuations, the structuring of corporate transactions, and the net return on an investment. 

For this reason, both changes are significant. Under the Reconstruction Law, capital gains covered by the regime will no longer constitute taxable income. Under the Capital Markets reform bill, if enacted in its current form, the range of instruments eligible for this treatment would be expanded. 

What should companies and investors review to apply Article 107? 

Before determining the tax treatment of a transaction, it is advisable to verify: 

• That the instrument falls within the range of the provision. 

• That the specific requirements applicable to that instrument are satisfied, including, among others, requirements relating to its acquisition, the manner of disposal, stock market presence or free float, and the fund’s investment policy. 

• The acquisition date. Under the Bill, instruments subject to Article 107 that were acquired before its entry into force would continue to be governed by the current rules. 

An incorrect application of Article 107 may result in significant tax differences. Therefore, specialized advice is recommended to properly determine the applicable tax treatment.