RECONSTRUCTION
BILL
On April 22, 2026, the Government submitted the "Reconstruction Bill" to Congress. The bill contains a comprehensive tax package: from reducing the corporate tax and reintegrating the system, to temporary VAT exemptions, stability for large projects, and mechanisms for regularizing assets and debts. At ValleNorambuena, we are closely monitoring its progress and, to keep our clients updated, we have created this microsite, where we will upload information and exclusive material on the reform's developments and content.
PERMANENT
REFORMS
1. Reduction of the First Category Tax (Corporate Income Tax)
The bill reduces the First Category Tax (Impuesto de Primera Categoría – IDPC) rate from the current 27% to 23% for taxpayers subject to the general regime under Article 14(A) of the Income Tax Law (LIR). The reduction is gradual and set out in Article 6 of the transitional provisions, following this schedule:
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FY 2026: 27%
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FY 2027: 25.5%
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FY 2028: 24%
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FY 2029 onward: 23% (permanent rate)
The Pro Pyme regime (Article 14(D)(3)) maintains the transitional rates established under Law No. 21,755 for FY 2027 and 2028, likewise converging to 23% from FY 2029 onward, thereby eliminating the current rate differential between regimes.
2. Reintegration of the tax system
The obligation to restitute part of the corporate tax credit under the current semi-integrated system would be eliminated, transitioning back to a fully integrated system, under which 100% of the IDPC paid at the corporate level would be creditable against shareholders’ final taxes (Personal Income Tax or WHT).
The transition is gradual and established in Article 5 of the transitional provisions:
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FY 2026 (current regime): 35% restitution (65% credit available)
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FY 2027: 30% restitution (70% credit available)
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FY 2028: 20% restitution (80% credit available)
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FY 2029 onward: no restitution (100% credit available)
During the transition period, withdrawals must be credited in strict chronological order: first against balances accumulated in the SAC (Corporate Tax Credit Register) as of FY 2026 year-end under the rules then in force, and subsequently against annual balances generated under the progressively reduced restitution percentages.
For foreign shareholders protected under double taxation treaties, who already had access to the full 100% credit, the reform produces no material change. The principal impact falls on non-treaty investors, who currently may credit only 65%, and whose effective maximum tax burden would decrease to approximately 35% under full integration.
3. Tax credit for formal employment (new Article 33 ter LIR)
Effective date: First day of the month following publication in the Official Gazette.
A new Article 33 ter is introduced into the LIR establishing a tax credit against IDPC available to taxpayers under both:
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the general regime (Article 14(A)), and
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the Pro Pyme regime (Article 14(D)(3)).
The credit is calculated based on each employee’s monthly compensation, including taxable remuneration plus cash-paid allowances for meals, transportation, and accommodation. It is prorated for part-time employment.
Credit rates:
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15% for remuneration up to 7.8 monthly UTM
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Gradually reduced for remuneration between 7.8 and 12 UTM
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0% for remuneration equal to or exceeding 12 UTM
The credit is first offset against monthly provisional tax payments (PPM). Any excess may be applied against VAT debits in the following month or carried forward to future tax years until fully used. The credit does not generate refunds. Restrictions:
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State-owned companies or entities with more than 50% public ownership are excluded
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The credit cannot be combined with other public hiring-cost subsidies applicable to the same employee
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Fraudulent use results in loss of the benefit and criminal sanctions
As a related measure, the SENCE training tax credit (Articles 26 and 27 permanent provisions) — which allowed taxpayers to offset up to 1% of taxable payroll against IDPC — is repealed.
4. Elimination of tax on publicly traded capital gains
Effective date: 1 January 2027 (deferred effectiveness under Article 9 of the transitional provisions).
Article 107 LIR is amended to restore the status of non-taxable income (ingreso no constitutivo de renta) to capital gains derived from the disposal of:
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publicly traded shares, and
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publicly traded mutual fund and investment fund units.
This reverses the 2022 reform, which introduced a 10% flat tax on such gains. Consequently, the following are also repealed:
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stock-market loss deduction rules
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withholding mechanisms
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related reporting obligations
5. Property tax exemption for senior citizens
Effective date: 1 January of the year following publication in the Official Gazette.
A 100% exemption from municipal property tax (impuesto territorial) is introduced for individuals aged 65 or older, with respect to their principal residence, defined as their habitual residence whose address matches their electoral address registered with SERVEL.
Conditions and limitations:
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Limited to one property nationwide
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Applies to mixed-use properties if residential surface represents at least 50% of total built area
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In cases of co-ownership:
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all co-owners must be individuals, and
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the resident must hold at least 50% ownership, or 25% if acquired through succession from a deceased spouse or civil partner
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Requires filing a sworn statement with the SII
Audit and penalties:
The SII may cross-check information with the Civil Registry, SERVEL, and the Investigative Police (PDI) to verify effective residence. Improper claims trigger severe penalties:
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fine equal to 300% of the avoided tax
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10-year disqualification from accessing the benefit
Surviving spouses or civil partners may retain the benefit for up to three years following the owner’s death.
An anti-avoidance rule prevents artificial transfers among relatives or related entities.
6. New DFL-2 rental regime: 5% flat tax
Effective date: 1 January 2027 (deferred effectiveness under Article 9 transitional provisions).
DFL-2 is amended to introduce a simplified taxation regime on rental income derived from small residential units (maximum 90 m² per unit) through new Articles 24 bis, 24 ter and 24 quáter.
Individuals (Article 24 bis)
Rental income becomes subject to a 5% flat income tax, applied on gross contractual rent without deductions, beginning with the third qualifying property onward. The first two qualifying units remain subject to the current DFL-2 regime.
Legal entities and sole proprietorships (Article 24 ter)
Legal entities and individual businesses (from the third qualifying property onward) may elect the same 5% flat tax on gross rental income for all qualifying units.
The election must be notified to the SII:
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upon commencement of activities, or
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within the deadline established by administrative resolution
If exercised later, it applies starting the following tax year. The election is:
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irrevocable for at least five consecutive tax years
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unavailable again once abandoned
Effects of the regime (Article 24 quáter)
Payment of the tax fully satisfies income tax liability. Amounts are recorded as fully taxed income in the REX register and may be withdrawn, remitted or distributed under the rules of Article 14(A)(4) LIR.
Taxpayers must still:
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make monthly provisional payments (5% / 12)
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file an annual tax return under Article 65 LIR
7. Tax stability regime for large investments
Effective date: First day of the month following publication. Stability applies from execution of the agreement with the State and lasts 25 years.
Article 33 introduces a 25-year tax stability regime for projects involving investments of USD 50 million or more, including projects in:
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mining
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industry
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forestry
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energy
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infrastructure
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telecommunications
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R&D
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medical and scientific sectors, among others.
The regime is formalised through contracts entered into with the Chilean State.
For foreign investors
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Maximum effective income tax burden capped at 35% (excluding mining royalty)
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Stability of the essential elements of the tax regime in force at the time of contract execution
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Freezing of VAT treatment and customs tariff treatment for imported capital goods during project execution
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Mining projects receive additional stability regarding:
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mining royalty
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new mining-specific taxes
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adverse changes to exploration and exploitation concession fees
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For domestic investors
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Same investment thresholds and duration
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Stability granted with respect to:
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IDPC
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Personal tax
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VAT
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Additional stabilised matters (both investor categories): Administrative interpretations issued by the SII relating to: depreciation, tax loss carryforwards, start-up and initial expenses.
The regime may extend to projects forming part of a single operating unit or designed to:
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maximise performance
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incorporate updated technologies
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expand productive capacity
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increase efficiency levels
If subsequent legal or administrative changes become more favourable, investors may apply them in lieu of the agreed stability regime.
8. SII data interoperability powers
Effective date: First day of the month following publication.
Article 59 of the Tax Code is amended to clarify the authority of the SII to request, receive, and cross-check information from any database or registry maintained by public administration bodies, where necessary for tax enforcement.
The SII is expressly required to ensure confidentiality and data protection under existing secrecy rules.
A new Article 85 quáter of the Tax Code also requires the Ministry of Social Development and Family to provide the SII with access to data contained in the Social Household Registry (RSH), exclusively to enable more accurate auditing and proper application of tax benefits and liabilities.
TEMPORARY
REFORMS
9. Temporary VAT exemption on the first sale of residential property
Effective date: One year from the first business day of the month following publication of the law. A retroactive window applies to transactions executed as from 22 April 2026 (date of the presidential message).
A VAT exemption is introduced for the first transfer of newly built residential property, provided the property has obtained final or partial municipal completion approval (recepción definitiva o parcial) from the competent Municipal Works Department (DOM) prior to publication of the law, in accordance with Article 144 of the General Urban Planning and Construction Law (LGUC).
Cumulative eligibility requirements:
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First transfer: This refers to the first transfer for consideration of ownership of a newly built property following issuance of municipal completion approval. Transfers between related parties within the meaning of Article 8 No. 17 of the Tax Code do not qualify.
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Completion approval prior to publication: The property must have obtained final or partial completion approval before publication of the law, evidenced by the corresponding certificate. No limits apply regarding property value or surface area. Parking spaces and storage units sold together with the dwelling are included where covered by the same completion approval.
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Execution within the applicable period: The purchase agreement must be executed by public deed within the one-year benefit period, or be based on a promissory purchase agreement granted by public deed or notarised private instrument within that same period (in which case the final purchase deed may be executed later).
Treatment of construction VAT input credits:
The exemption does not affect the seller’s entitlement to construction-stage VAT input credits. Such credits may be offset against VAT debits arising from other taxable transactions (Article 23 of Decree Law No. 825). Alternatively, the seller may elect to account the remaining balance as part of the tax cost of the asset or deduct it as an expense in a subsequent fiscal year following the sale.
Important technical point:
Sales exempt under this rule are excluded from the proportional VAT input-credit calculation under Article 23 No. 3 of Decree Law No. 825. This preserves the recoverable VAT credit percentage of taxpayers carrying on mixed activities (taxable and exempt) and prevents deterioration of their input-credit entitlement as a result of the temporary exemption.
Retroactive window from the presidential message:
Transactions formalised by public deed between 22 April 2026 and the first business day of the month following publication of the law also qualify.
Where VAT has already been paid in such cases, the seller may request a refund under Article 126 of the Tax Code. Compliance with Article 128 of the Tax Code will be deemed satisfied upon evidence, by any means, that the seller reimbursed the purchaser for the VAT effectively borne. The refund amount corresponds exactly to the amount reimbursed.
To access the exemption, the public purchase deed must include explicit reference to the exemption.
10. Temporary reduction of gift tax
Effective date: One year from the first day of the month following publication of the law.
A 50% reduction in gift tax applies to gifts formalised by public deed during the applicable period. In addition, the court approval requirement (insinuación) is temporarily eliminated.
Use-of-proceeds conditions (cumulative requirements):
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At least 50% of the transferred assets must benefit forced heirs (legitimarios).
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At least 25% must be allocated to the improvement portion of the estate (cuarta de mejoras).
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The donated amount may not exceed 75% of the donor’s total estate.
Additional simplification measures:
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Elimination of the court approval (insinuación) requirement.
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Gift tax may be financed through loans granted by the recipient entities or their related parties, without triggering the penalties under Article 21 of the Income Tax Law.
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Payment of the tax is a condition precedent to execution of the public deed of gift, with the possibility of filing a sworn statement before the SII.
Special Anti-avoidance rule:
If the donated assets are disposed of within three years following the gift, the recipient’s tax basis will correspond to the donor’s original tax basis rather than the value assigned to the gift. This prevents artificial step-ups in acquisition cost through gifting structures.
11. Repatriation and regularisation of foreign assets
Effective date: 12 months from the first day of the month following publication of the law. Applies to assets and income generated up to 31 December 2025.
A 12-month voluntary disclosure window is introduced for Chilean-resident taxpayers to regularise foreign assets and related income acquired or generated up to 31 December 2025.
The regime applies a one-off substitute tax, which extinguishes civil, criminal and tax liabilities arising from prior non-compliance.
Rates:
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10% on the fair market value of declared assets or income (general rate).
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7% where assets are effectively repatriated and reinvested in Chile and maintained in domestic investments for at least five years.
The regime also applies to assets or income that were not previously subject to taxation in Chile because they had not been realised under the rules of the Income Tax Law, because Article 41 G of the Income Tax Law (CFC rules) did not apply, or because no other rule required recognition for Chilean tax purposes.
Limitations and safeguards:
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Funds originating from jurisdictions classified as high-risk by the FATF are excluded.
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Individuals formally charged with money laundering or tax offences are excluded.
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Identification of ultimate beneficial owners is required.
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Information-sharing is authorised between the SII, the Financial Intelligence Unit (UAF) and the Central Bank.
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Failure to comply with investment requirements or fraudulent declarations results in loss of the benefit and triggers penalties and criminal liability.
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Not electing this regime constitutes an aggravating factor for future tax offences involving the same assets.
12. Substitute tax on historical FUR, STUT and FUT balances
Effective date: Election available for 8 months following publication of the law.
Two parallel mechanisms allow taxpayers with historical accumulated taxable earnings balances to pay a voluntary substitute tax, fully satisfy final taxation, and clean up legacy registers prior to completion of the gradual reintegration process.
First mechanism (Article 11 transitional provisions) — FUR and STUT:
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Taxpayers may elect to pay a 10% substitute tax on balances recorded in the Reinvested Earnings Fund (FUR) and the Total Taxable Earnings Balance (STUT), subject to a cap equal to the balance recorded in the Taxable Earnings Register (RAI) as of FY 2025 or FY 2026 year-end, as applicable.
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Payment fully satisfies final taxation obligations. Associated tax credits must be removed from the company’s earnings registers.
Second mechanism (Article 12 transitional provisions) — excess FUT withdrawals:
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A similar mechanism applies to excess FUT withdrawals pending final taxation as of FY 2025 or FY 2026 year-end.
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The substitute tax rate is likewise 10%. The tax paid is non-deductible for purposes of determining taxable income.
Election period: Eight months from publication of the law.
13. Treasury payment facilities and penalty waivers
Effective date: 180 days from publication of the law. Applies to tax debts accrued up to 31 December 2025.
The Treasury (Tesorería General de la República) is authorised, for a period of 180 days following publication of the law, to grant payment arrangements for overdue tax liabilities accrued up to 31 December 2025.
The benefit applies to individuals, micro-enterprises, and small and medium-sized enterprises.
Lump-sum payment:
Up to 100% waiver of interest.
Up to 80% waiver of penalties.
Installment agreements (up to 24 instalments):
Up to 95% waiver of interest.
Up to 75% waiver of penalties.
Installment agreements require a minimum upfront payment equal to 10% of principal.
The benefit is subject to a condition subsequent: failure to comply with any instalment automatically revokes the waiver and reinstates original interest and penalties on the outstanding balance.
Maximum of three agreements per taxpayer.
14. Municipal debt relief programme
Effective date: First day of the month following publication of the law. Applies to debts accrued between 1 January 2023 and 31 December 2025.
An extraordinary procedure is introduced to regularise municipal debts, including business licences, vehicle circulation permits and waste collection charges accrued during the three years prior to 1 January 2026.
The benefit consists of a 100% waiver of interest and penalties.
Municipalities are also authorised to waive collection actions in respect of debts for which taxpayers could otherwise assert a statute-of-limitations defence.
LEGISLATIVE
DOCUMENTS