The following tax measures could encourage investment and are attractive to a broad range of taxpayers:
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 businesses 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.
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. Five percent single tax on income from the lease of small economic housing units
The bill introduces an optional regime subject to a 5% single tax on the gross amount of rental income, without deductions, applicable to the lease or exploitation of economic housing units with a built area not exceeding 90 square meters per unit. The regime applies to individuals beginning with the third property and to legal entities whose sole business activity is residential leasing.
The measure would become effective on January 1st, 2027.
5. 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.
6. Fifty percent reduction of the gift tax
The bill includes a temporary 12-month benefit reducing gift tax by 50% for gifts made to forced heirs and beneficiaries of the improvement portion (cuarta de mejoras).
This measure facilitates intergenerational wealth transfers at a reduced tax cost. Early transfers of assets to future heirs also allow the income generated by those assets to accrue directly to the donees.
The bill further simplifies and streamlines the donation process. Under ordinary rules, donations generally require judicial approval through voluntary court proceedings, often taking years to complete. Under the proposed regime, donations may instead be executed through a public deed and the filing of a sworn statement before the Chilean Internal Revenue Service (SII).
In addition, the bill introduces mechanisms that facilitate financing the gift tax using funds provided by the donated companies or their related entities.
7. Voluntary disclosure regime for foreign assets and income
The bill creates a 12-month voluntary and extraordinary regime allowing Chilean taxpayers to declare foreign assets and income that were not timely reported or taxed in Chile. The regime applies to assets acquired before January 1st, 2026, and to income generated by such assets up to the date of declaration.
Such assets and income are subject to a 10% tax.
Taxpayers are not required to bring the assets into Chile. However, those who transfer the assets or income into Chile and keep them invested in the country, either directly or indirectly through real estate, securities, or other instruments with underlying assets located in Chile, for a period of at least five years, may benefit from a reduced 7% rate.
A taxpayer will be deemed to maintain the investment in Chile when they retain, directly or indirectly, ownership of real estate located in Chile, securities referred to in Articles 104 or 107 of the Income Tax Law, or any other public or private debt or equity instrument whose ultimate underlying assets are located in Chile and represent at least 80% of the total investment.
This regime allows taxpayers to regularize foreign assets and income that were not properly reported and for which the corresponding Chilean taxes were not paid.
8. VAT exemption for the first sale of residential properties
The bill establishes, for a period of one year, an optional Value Added Tax (VAT) exemption for the first sale of residential properties, provided that, as of the publication date of the law, the property has obtained final occupancy approval from the corresponding Municipal Works Department.
9. 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.
10. Expanded regime for newly acquired economic housing
Taxpayers acquiring new economic housing units of up to 140 square meters within 12 months following publication of the law may elect to be subject to the 5% single tax regime on income derived from their exploitation.
For these purposes, a new housing unit is one that complies with the requirements of DFL 2 and has not previously been transferred prior to the purchase and sale transaction.
Unlike the general regime, eligibility does not require the property to be the third housing unit or subsequent properties.
Other noteworthy amendments
1. Property Tax exemption for primary residences owned by individuals over 65 years of age.
2. Tax credit for remunerations paid in connection with knowledge-based service exports
First Category Tax taxpayers that pay remunerations for services performed wholly or partially in Chile, based on knowledge-intensive activities involving information technologies or technological development, classified as exports by the National Customs Service, included in the catalogue to be issued by the Ministry of Finance, and provided to persons with no domicile or residence in Chile for use abroad, will be entitled to a tax credit equal to 15% of the remunerations paid to each employee during the year.
The credit increases to 20% when the services are provided by companies located in decentralized regions.
The annual credit is capped at 75 Monthly Tax Units (UTM) per employee, subject to additional requirements.
3. Tax credit for catastrophic illness treatment expenses
Companies subject to either the general or Pro-PYME tax regime that finance catastrophic illness treatments for employees, their children up to 25 years of age, or their spouse or civil partner, will be entitled to a tax credit against First Category Tax of up to 150 UTM per employee (one-time limit throughout the employment relationship).
Payments must be made directly to healthcare providers registered with the Health Superintendency, among other requirements.
This content is provided for informational purposes only and does not constitute legal or tax advice. For questions or further information on this matter, please contact our Tax team.