The following tax measures included in the National Reconstruction and Economic and Social Development Bill would create opportunities for foreign investors:

1. Reduction of the First Category Tax rate

The bill provides for a gradual reduction of the First Category Tax rate from the current 27% to 23% by the 2029 business year.

This rate reduction would lower the corporate tax burden on generated profits, allowing companies to retain greater liquidity and finance new investment vehicles.

2. Elimination of the obligation to restore the First Category Tax credit

The reform eliminates the obligation to restore 35% of the First Category Tax credit currently applicable to shareholders of companies operating under the general tax regime. As a result, taxpayers will be able to use 100% of the First Category Tax paid by the company as a credit against their Global Complementary Tax or Additional Tax, thereby returning to a fully integrated tax system.

This would reduce the overall tax burden on dividends and withdrawals, increasing the profitability of investment projects.

The measure would become effective on January 1st, 2027, with a transitional partial restoration of 30% and 20% during tax years 2028 and 2029, respectively.

The elimination of this restoration obligation is particularly relevant for investors who maintain investments in Chile while residing in countries with which Chile has not entered into a double taxation treaty.

3. Capital gains on publicly traded financial instruments

Capital gains derived from the sale of shares, investment fund units, mutual fund units, and other instruments with stock market presence would cease to be subject to the current 10% single tax and would instead qualify as non-taxable income.

This represents a significant benefit aimed at encouraging investment in these types of assets.

4. Tax Stability Regime

The bill introduces a contractual regime available to both foreign and domestic investors making investments exceeding USD 50 million. The regime would freeze the applicable tax burden for periods of 10, 15, or 20 years, depending on the amount invested, for the development of mining, industrial, forestry, energy, infrastructure, telecommunications, research, technological development, medical, and scientific projects, among others.

This regime provides contractual protection against future legislative changes affecting investments in Chile.

5. Substitute Tax on Accumulated Earnings

The bill establishes a one-time 10% substitute tax applicable to balances accumulated in the FUR and STUT registers (within eight months following publication of the law), without entitlement to use the related First Category Tax credit associated with such amounts, provided certain requirements are met.

This alternative would allow accumulated earnings that remain subject to final taxation to be taxed at a reduced rate.

This content is provided for informational purposes only and does not constitute legal or tax advice. For questions or additional information regarding this matter, please contact our Tax team.