On July 21st, the Chamber of Deputies voted on the amendments introduced by the Senate to the National Reconstruction and Economic and Social Development Bill, known as the “Omnibus Bill.” As a result, the initiative’s main components are now set to become law, following the approval of most of the changes incorporated during its legislative process.

Key tax measures approved:

– Reduction of the First Category Tax: A gradual reduction from 27% to 23% between 2027 and 2029, together with the reintegration of the tax system.

– Tax stability regime: A staggered stability period of 10 years for investments between USD 50 million and USD 100 million, 15 years for investments between USD 100 million and USD 350 million, and 20 years for investments equal to or exceeding USD 350 million.

– Employment tax credit: Establishes a tax credit equivalent to 15% of remunerations paid to workers domiciled and residing in Chile by exporting companies of knowledge-based services. The benefit is capped at 75 Monthly Tax Units (UTM, for its initials in Spanish) per employee and may increase to 20% for companies headquartered or operating branches outside the Metropolitan Region or in its rural municipalities. In addition, the Senate incorporated a new tax credit of 150 UTM per employee against First Category Tax for employers that finance catastrophic illness treatments for their employees or their family members.

– Changes to the SENCE tax incentive: Reduces the incentive limit from 1% to 0.7% of annual payroll and redefines training funding percentages, granting greater benefits to lower-income workers.

– Capital repatriation regime: Establishes a 10% tax rate for voluntarily declaring assets held abroad (for 12 months starting on the first day of the third month following the law’s publication), reduced to 7% if the funds are brought back to Chile for at least five years (within the first three years following the law’s publication).

– Temporary reduction of the gift tax: A 12-month window is established during which gifts made to forced heirs and beneficiaries of the improvement portion (cuarta de mejoras) will be subject to only 50% of the ordinary gift tax, unless the donor has no such beneficiaries at the time of the donation.

– Property tax exemption for senior citizens: Exempts the primary residence of individuals aged 65 or older from property taxes, provided they meet the requirements established by law.

– New DFL-2 exemption: Establishes a special regime for income derived from DFL-2 residential properties, applying a 5% single tax to owners starting from their third property.

– 10% substitute tax: Applicable to accumulated earnings recorded in the Reinvested Profits Funds (FUR, for its initials in Spanish) and the Total Taxable Profits Balance (STUT, for its initials in Spanish) registers, as well as excess withdrawals.

The only tax-related matter that failed to reach agreement between both chambers was the fiscal contribution intended to compensate the Municipal Common Fund (FCM, for its initials in Spanish) for the property tax exemption granted to individuals aged 65 or older, which is why it had to be reviewed by a joint committee.

Although the Chamber subsequently approved the committee’s report and the government expected to clear the bill this Wednesday, the Executive withdrew its urgency status after realizing it did not have the necessary votes to approve the joint committee’s report. As a result, the vote was postponed, tentatively, until the first week of August.

Once this discrepancy is resolved and the final stages of the legislative process are completed—including the potential filing of presidential vetoes and review by the Constitutional Court (TC, for its initials in Spanish)—the first transitional provisions of the law could enter into force in the following months. These include the temporary reduction of the gift tax, the temporary VAT (IVA, for its initials in Spanish) exemption for certain sales or promises to sell new residential properties, and the capital repatriation window.

The property tax exemption for senior citizens would begin to apply in 2027, and the reduction of the First Category Tax will be implemented gradually between 2027 and 2029, while the constitutionality of the tax stability regime must be resolved by the TC because of the constitutional challenge filed by the opposition.  

Thus, while some measures could begin to take effect in the short term, others will be implemented gradually over the coming years.