/ Bill for National Reconstruction and Economic and Social Development

On Wednesday, April 22, the Government submitted to Congress a bill for National Reconstruction and Economic and Social Development, which includes a set of economic measures, including various tax and fiscal amendments.

Nicolás Alvarado
Of Counsel

These measures aim to reverse the conditions that have limited economic growth, encourage investment, revitalize strategic sectors of the economy, and contribute to financing the reconstruction process.

The following is a summary of the main tax aspects contained in the bill:

I. CORPORATE TAX CUT

• A reduction in the First Category Tax (IDPC) rate is proposed, applicable to both large companies and small and medium-sized enterprises (SMEs).
• Specifically, for large companies, the IDPC rate would be gradually reduced from 27% to 23% over a four-year period.
• On the other hand, for SMEs, the current phased reduction established in Law No. 21,755 would be maintained, with the exception that, starting in the 2029 tax year, the applicable rate would be 23% instead of the current 25%.

II. REINTEGRATION OF THE TAX SYSTEM

• It is proposed to reestablish a fully integrated system between corporate tax and final taxes affecting owners or shareholders.
• Consequently, the First Category Tax would constitute a 100% credit against the Global Complementary Tax or Additional Tax.
• The implementation of this change is envisaged gradually, through a progressive reduction of the obligation to repay the credit, applicable to profits generated in the fiscal years 2027 and 2028, until its total elimination in the final regime.

III. ELIMINATION OF THE TAX ON STOCK MARKET CAPITAL GAINS

• The elimination of the 10% flat tax levied on certain capital gains derived from stock market transactions is contemplated.
• Consequently, such gains would once again be treated as non-taxable income.

IV. TRANSITIONAL BENEFIT FOR THE GIFT TAX

• A temporary 50% reduction in the gift tax is established, applicable to gifts formalized by public deed within one year from the first day of the month following the publication of the law.
• The judicial filing procedure for this type of transaction is eliminated, which will allow for greater speed in their completion.
• Donations must comply with mandatory bequests and may not exceed 75% of the donor’s total assets.

V. REPATRIATION OF CAPITAL

• A temporary, voluntary, and extraordinary system is established for the declaration of assets or income held abroad as of December 31, 2025.
• Such assets will be subject to a one-time substitute tax of 10% applied to their market value.
• A preferential rate of 7% is provided for if the funds are repatriated and effectively invested in Chile for a minimum period of 5 years.

VI. SUBSTITUTE TAX ON ACCUMULATED PROFITS

• A voluntary mechanism is introduced that allows companies to subject accumulated balances in accounts such as FUT, FUR, and STUT to a one-time tax of 10%.
• The option to avail oneself of this regime may be exercised within 8 months from the publication of the law, with respect to balances determined as of December 31, 2025, or 2026.
• This tax replaces final taxes and does not entitle the taxpayer to a credit.

VII. NEW EMPLOYMENT TAX CREDIT

• A tax credit is introduced to incentivize the hiring and retention of formal employment.
• The amount of the credit will be determined based on the worker’s gross monthly compensation, under a progressive scheme. Specifically, a benefit of up to 15% of compensation is established for lower-income workers, which gradually decreases as the compensation level increases, ceasing to apply for higher salaries.
• This credit may be applied against monthly provisional payments (PPM), Value-Added Tax (VAT), and, ultimately, First Category Income Tax, and may also be carried forward to subsequent fiscal years if any balance remains.

VIII. TEMPORARY VAT EXEMPTION ON THE SALE OF NEW HOMES

• A temporary exemption from Value Added Tax (VAT) applicable to the first sale of new homes is proposed, for a period of one year, provided that such homes have received municipal approval as of the date of publication of the law.
• To qualify for the benefit, the sale must be formalized by public deed within the measure’s effective period, or it must be supported by a promise of sale executed by public deed or a private instrument filed within that period.

IX. AMENDMENTS TO THE DFL 2 REGIME

• A new tax regime is established for rental income from homes covered by DFL 2.
• In the case of individuals, rental income from the third home and beyond may be subject to a flat tax of 5%, while the current regime remains in effect for the first two properties.
• This treatment extends to legal entities with respect to certain homes that meet the established requirements.
• The benefit is limited to homes of up to 90 m².

X. PROPERTY TAX EXEMPTION FOR SENIOR CITIZENS.

• A property tax exemption is established for individuals over 65 years of age with respect to their primary residence.