Law No. 21.850 for National Reconstruction and the Economic and Social Development of Chile: Tax Measures.

On October 17, 2026, Law No. 21.850 on National Reconstruction was published in the Official Gazette (Diario Oficial). Its purpose is to finance the reconstruction of the areas affected by the fires in the Valparaíso, Ñuble and Biobío regions, as well as to boost economic growth and investment in Chile.

The text combines measures of different kinds, several of them highly relevant in tax matters. This document systematizes those tax measures, explaining the meaning of each one and distinguishing those that affect income taxes, VAT and other matters.

I. Income Tax Measures

1. Gradual reduction of the corporate tax in the Partially Integrated Regime.

The 27% rate that applies under the Partially Integrated tax system is gradually reduced, so that from commercial year 2029 onwards it stays permanently at 23%. During commercial years 2027 and 2028 the rate will decrease gradually, following this schedule:

2. Gradual reduction of monthly provisional payments (PPM)

As a consequence of the gradual reduction of the corporate tax, the monthly provisional payments (PPM) that taxpayers must make each month will also have to be reduced. The following table shows the gradual reduction of the PPM rate that will apply under the Partially Integrated regime:

For the Pro-SME Regime (Pro-Pyme), the PPM rate is reduced from 0.25% to 0.23% as of November 1, 2026, permanently.

3. Full use of the First Category Tax for the payment of final taxes.

Beginning January 1, 2027, a gradual reintegration of the tax system will start for taxpayers in the Partially Integrated regime, so that what they pay as corporate tax (First Category Income Tax) can be fully used as a tax credit for the payment of the so-called “Final Taxes”, that is, the Global Complementary Tax or the Additional Tax, as applicable to each taxpayer. This reintegration will take place by gradually reducing the percentage of the corporate tax that the owners of the companies cannot use, until all of it is usable. The reintegration will follow this schedule:

This change does not affect Additional Tax taxpayers domiciled in countries with which Chile has a Double Taxation Agreement (DTA) in force, since those taxpayers can already use 100% of the corporate tax credit to pay the Additional Tax that applies to them.

Finally, income generated in any of the years in which a restitution percentage applies will keep that restitution obligation regardless of the year in which it is withdrawn from the company that generated it.

4. Tax exemption on gains from the sale of Chilean shares or fund units with stock market presence.

Capital gains obtained on the sale of shares, investment funds and mutual fund units with stock market presence in Chile, regulated in Article 107 of the Income Tax Law (Ley sobre Impuesto a la Renta), are exempted from income taxes.

This measure applies from January 1, 2027, permanently. It should be recalled that, until the end of 2026, the profit generated by this income is subject to a single tax of 10%.

This measure applies to all kinds of taxpayers, that is, individuals or legal entities, local or foreign.

5. Single substitute tax at a 10% rate on accumulated balances in the FUR, STUT and excess withdrawals.

A voluntary and transitory regime is created that allows historical balances pending taxation against final taxes to be regularized through a 10% single tax, substituting those final taxes. Taxpayers that hold recorded profits in one or more of the following business income registers may avail themselves of this measure:

• Total Balance of Taxable Profits (STUT): register that tracks the remainder of taxable profits accumulated under the former FUT regime. It covers profits generated up to December 31, 2016.
• Reinvested Profits Fund (FUR): register that tracks amounts that, under the regime in force until December 31, 2016, were withdrawn from one company and reinvested in another, postponing the application of final taxes while they remained reinvested. It covers reinvestments made between January 1, 2015 and December 31, 2016.
• Excess withdrawals: amounts withdrawn by the owners up to December 31, 2014 which, because they exceeded the company's available profits in the relevant period, were not subject to final taxes at the time of withdrawal and whose taxation remains pending.

This measure is transitory, meaning that those who wish to use it must exercise it between October 17, 2026 and June 17, 2027 (an 8-month period). A taxpayer may file as many declarations as desired, always within the period.

Finally, the tax credits that these profits have paid must be eliminated once the 10% single tax payment alternative is exercised.

6. Credit for remunerations in knowledge services.

A credit is created that may be applied against the First Category Income Tax (corporate tax), benefiting companies that export knowledge services in the digital economy. The services must be knowledge-based, qualified as exports by the National Customs Service, provided to persons with no domicile or residence in Chile and for use abroad.

The credit is 15% of the remunerations of workers domiciled in Chile who provide such export services. The credit is capped at 75 UTM (monthly tax units) per worker per year. If in a given year the company is in a tax loss or the credit exceeds the corporate tax payable, the unused balance may be applied against the corporate tax of the following years, until it is fully used by way of application. In no case may a refund of the unused balance be requested from the General Treasury of the Republic (TGR).

This measure will be in force from November 1, 2026 onwards, permanently.

7. Credit for the treatment of catastrophic illnesses.

A credit against the corporate tax for payments made by companies to finance treatments of catastrophic illnesses of their workers, of their children aged 25 or younger, or of their spouse or civil partner.

The credit is limited to 150 UTM per worker throughout the duration of the employment relationship, with no right to a refund. The excess over 150 UTM may be deducted as a necessary expense to produce income. The credit does not apply to benefits covered by Fonasa, Isapres, insurance or other coverage systems.

This measure will be in force from January 1, 2027, permanently.

8. 5% single tax on rental income from “DFL2” housing.

From January 1, 2027, and permanently, individuals who own three or more homes under the “DFL2” regime may opt, from the third home onwards, for a 5% single tax on rental income, with no deductions whatsoever.

Legal entities and sole proprietors whose line of business is exclusively of this kind may also avail themselves of this measure. Making investments to preserve cash flows and selling such affordable homes does not alter the exclusivity of line of business that is required.

The homes must have a built surface of up to 90 m² of usable area per unit, obtained through contracts entered into with unrelated persons.

The measure applies both to the homes the taxpayer currently owns and to new ones the taxpayer acquires. The rule states that the storage units and parking spaces associated with such homes will be part of the latter for the purposes of this tax, and that the size of those parking spaces and storage units is not counted toward the 90 square meters of usable area.

For the first two affordable homes, the currently existing benefit (non-income) is maintained.

In addition, a 12-month transitory regime is established for those who acquire new “DFL2” homes of between 91 and 140 m² of usable area from unrelated parties. To qualify for this benefit, the purchase agreements must be entered into between October 17, 2026 and October 17, 2027. In this way, those properties may qualify for the 5% single tax on their rental income generated from January 1, 2027.

9. Regularization of assets and income located abroad

A voluntary and transitory system is established that allows the tax situation of assets and income held abroad to be regularized through their declaration and the payment of a 10% single substitute tax, a rate that drops to 7% if the assets are brought into the country and remain effectively invested in Chile for at least five years.

The eligible assets for this mechanism are all those acquired before January 1, 2026. Likewise, income derived from those assets and generated up to the date on which the taxpayer files the corresponding declaration may be included.

This extraordinary and transitory regime will be in force between January 1, 2027 and December 31, 2027. A taxpayer may file as many declarations as desired, always within the period.

10. Tax invariability statute

A special regime of long-term tax security and stability is established, aimed at attracting large-scale investment. This special statute is implemented through a private investment contract between the State of Chile and the investor, whether local or foreign. By signing such a contract, Chile undertakes to maintain the effective income tax burden in force on the date the investment contract is entered into, increased by 1.5%, with invariability in VAT and customs duties, in addition to income taxes.

It remains in force from January 1, 2027 for the term of each project from its start-up.

The statute is designed for investment projects starting at USD 50 million. The following table shows the years of tax invariability guaranteed to the investor, based on the amount of the investment the investor commits to make.

II. VAT Measures

11. VAT exemption on the first sale of homes

A transitory one-year VAT exemption is established on the sale of new homes, which the seller may voluntarily opt for, for transactions that would be subject to VAT under the general regime. It applies to properties intended for residential use, regardless of sale value or square meters.

It requires that the home have a final construction completion certificate (recepción definitiva) dated no later than October 17, 2026. It applies to the first transfer and does not apply between related companies. The seller keeps the input tax credit associated with construction and marketing.

The transitory exemption will be in force from December 1, 2026 until December 1, 2027.

Likewise, a retroactive refund of VAT already paid may be requested for sales formalized by public deed between April 22, 2026 and December 1, 2026, pursuant to Article 126 of the Tax Code. To obtain this refund, it will be necessary to have expressly mentioned this circumstance in the public deed of sale, and the seller must prove that it previously returned the amount of VAT charged to the buyers who actually bore it.

III. Other Measures

12. Transitory reduction of the gift tax

It consists of a temporary 50% reduction of the gift tax, applicable once per donor. Gifts are also released from the judicial approval procedure (insinuación judicial, which requires a judge's authorization to donate), and must be made directly by public deed, signed between December 1, 2026 and December 1, 2027.

In no case may the value donated exceed 50% of the donor's total net worth, a limit intended to protect the donor's forced heirs, known as legitimarios.

For the calculation of credits in future inheritances, the amount of tax that would have been due without the 50% reduction will be considered paid, that is, it may be applied at 100% as a credit against the tax on inheritance assignments.

In addition, the tax may be financed through loans from the companies whose partnership rights or shares are donated, or from related companies, without the 40% single tax penalty established in Article 21 of the Income Tax Law being applicable.

13. Permanent property tax exemption for persons aged 65 or older

From January 1, 2027, real estate that is the primary residence of individuals aged 65 or older is 100% exempt from property tax. The exemption includes associated parking spaces and storage units. It may only be invoked for one residential property (at least 50% of its surface must be used as housing).

In the event of the beneficiary's death, the estate keeps the benefit for three years. If the property is co-owned, the exemption applies when all co-owners are individuals and at least one of them actually resides in it.

14. Temporary payment facilities for debts owed to the General Treasury of the Republic

The General Treasury of the Republic (TGR) is empowered to grant, until April 15, 2027, payment facilities for debts that fell due before January 1, 2026. These facilities consist of the forgiveness of interest and fines on the debt or, alternatively, installment payment agreements at preferential rates. The TGR will issue a resolution establishing the general policy on forgiveness and agreements.

The payment agreement requires a down payment of at least 10% of the principal and a maximum of 48 installments. The benefit applies to individuals and to micro, small and medium-sized companies, with a maximum of three agreements per taxpayer.

The following table summarizes the measure:

15. Temporary regularization of municipal debts

A temporary procedure is established to regularize municipal debts for business licenses (patentes), waste collection fees and vehicle circulation permits, accrued within the three years prior to January 1, 2026, granting full forgiveness of interest and fines on those debts. The request must be submitted in writing by December 1, 2027.

If any of these measures is useful to you, we invite you to contact us.

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