Below is a summary of the main components of this legislative proposal:

I. STRENGTHENING THE SME REGIME AND NEW “ENTREPRENEURSHIP PATHWAY”

  • Transitional Regime for New Businesses: New companies will be able to opt, during their first two years, for a simplified regime that replaces VAT and income tax with a fixed monthly payment of 1 UTM (approx. US$ 70) . (Effective: January 1, 2027)
  • New Transparent Regime: The current transparent regime will be replaced by one with simplified accounting, instant depreciation, and exemption from the Corporate Income Tax. The integrated regime will remain available as a voluntary option, with a gradual increase in the tax rate until it reaches 20% starting in 2029. (Effective: January 1, 2030)
  • New Monotax Regime: Aimed at individuals in the most vulnerable 80% who are enrolled in FOSIS programs. It allows compliance with both tax and social security obligations through a single fixed monthly payment of 0.5 UTM (approx. US$ 35). (Effective: 3 months after the publication of the regulation, which must be issued within 180 days from the law’s publication)
  • Progressive VAT Reduction for New Ventures: New businesses will benefit from a graduated VAT discount: 100% exemption in the first year, 50% reduction over the following 6 months, and 25% reduction in the next 6 months. (Effective: January 1, 2027)

II. PERSONAL TAXES AND DEDUCTIBLE EXPENSES

  • The Global Complementary Tax marginal rate will increase to 40% for monthly incomes exceeding 150 UTM (approx. USD 10,000). (Effective: January 1 of the year following publication in the Official Gazette)
  • Article 52 bis, which granted special tax treatment to public authorities, will be repealed. (Effective: January 1 of the year following publication in the Official Gazette)
  • A new tax benefit will allow tenants to deduct up to 8 UTA (approx. USD 6,500) annually from their taxes for rent payments. This benefit will be reduced for incomes over 90 UTA (approx. USD 75,000) and excluded for those owning three or more properties. (Effective: in the same fiscal year when the new Global Complementary Tax rates come into effect)

III. REDUCTION OF EXEMPTIONS

  • The presumptive income regime will be limited exclusively to microentrepreneurs, that is, taxpayers with annual income up to 2,400 UF (approx. US$ 100,000), regardless of whether their activity is in agriculture, transportation, or mining. This change will be implemented gradually starting in 2027. (Effective: commercial year 2028, with certain exceptions applying from January 1, 2027)
  • A new VAT exemption will apply to sales of used movable goods, provided that:
    • The sale is carried out by nonprofit foundations or corporations officially recognized as charitable organizations.
    • The used goods come exclusively from donations received by those entities.

(Effective: January 1 of the year following publication in the Official Gazette)

IV. CHANGES TO INVESTMENT FUNDS

  • Amendments to Articles 81, 82, and 86 of Law No. 20,712 on Investment Funds aim to prevent the indefinite deferral of the Corporate Income Tax:
  • Profits distributed by investment funds must be recognized as taxable net income by the receiving taxpayers, who may use the Corporate Income Tax credit assigned to those profits, when applicable. (Effective: January 1, 2026)
  • Changes to applicable tax rates on profits remitted by investment funds:
    • Public Funds: The single tax rate increases from 10% to 20% for individuals not domiciled or resident in Chile. (Effective: January 1, 2026)
    • Private Funds: These will now be subject to the Corporate Income Tax, except when they invest in venture capital, in which case the current exemption is maintained. (Effective: January 1, 2027)

V. CHANGES TO THE INHERITANCE AND DONATIONS TAX

The bill introduces a comprehensive modernization of how assets are valued for the purposes of inheritance and gift taxes, through changes to Article 46 of the Law on Inheritance, Bequests, and Donations Tax. Key updates include:

  • New general valuation rule: Assets must be valued based on their “normal market value on the date the inheritance is deferred or the donation is made”, replacing the prior reference to “current market value”.
  • “Normal market value” is defined as the value that unrelated parties would agree upon in comparable transactions and circumstances, taking into account the asset’s characteristics and components.
    • Taxpayers may submit valuation studies or reports prepared by independent professionals.
    • If the declared value noticeably deviates from the normal market value, the Chilean IRS may determine the value according to Article 64 of the Tax Code.
  • Valuation of business interests:
    • Publicly traded companies meeting a minimum trading threshold: Shares, quotas, rights, or other securities are valued based on the average market price over the six months prior to the date of death or donation.
    • Non-listed companies or listed companies whose trading volume does not meet the threshold:
      • If audited financial statements exist, the valuation will be the higher of: the tax equity (where applicable) or the financial equity.
      • If not audited, the value must reflect the normal market value, supported by a technical report from the donor or heirs.

Other notable changes:

  • Revocable donations and donations to heirs or related parties are now considered taxable events, to avoid tax avoidance.
  • The tax may be paid in up to three annual installments, interest-free, to ease the financial burden on taxpayers.

(Effective: January 1 of the year following publication in the Official Gazette. However, any ongoing inheritance procedures will continue under the rules in effect when initiated)

VI. CHANGES TO PROPERTY TAX

  • Improved benefit for senior citizens: The property tax owed by older adults will be capped at a maximum of 5% of their income. (Effective: January 1, 2026)
  • The property revaluation originally scheduled for 2026 is postponed to 2027 to allow for improved access to information and increased transparency in the process.
  • The municipality of Lo Barnechea will now be included in the group of municipalities that contribute 65% of their property tax revenue, promoting greater territorial equity.

VII. PHASE-IN MEASURES

To manage the impact of reduced tax revenue between 2026 and 2028, the bill establishes transitional measures, including:

  • Gradual implementation of benefits for SMEs and the rent deduction benefit.
  • Early entry into force of the new personal income tax rates and changes to investment fund taxation.

 

 

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