In brief
Chile is set for targeted but meaningful tax changes following the 2025 election of right wing President elect José Antonio Kast, who will take office on 11 March 2026. His administration is expected to advance a pro investment, pro business agenda centered on lowering the corporate income tax rate, eliminating capital gains tax on small equity transactions, reinstating the fully integrated tax system, and reducing administrative burdens. Nonetheless, progress will hinge on negotiations in a Congress where Kast lacks a majority, as well as on Chile’s constrained fiscal environment. As a result, companies should anticipate that investment oriented tax measures will move forward, but with gradual implementation shaped by political dynamics and fiscal limitations.
In more detail
The incoming administration’s tax policy vision is anchored in its commitment to lowering the corporate income tax rate. Kast has emphasized that reducing the tax burden on companies is central to reinvigorating economic growth and enhancing Chile’s competitiveness relative to its regional peers. His program contemplates a reduction of the corporate tax rate from 27% to 23%, with the possibility of falling to 20% for companies that hire at risk workers. The proposal has found partial alignment with the People’s Party, an influential bloc in Congress whose members have expressed support for a corporate tax bracket ranging from 20% to 23%. While this convergence increases the likelihood of approval, the absence of a governing majority means that negotiations will determine the final contours of any reform.
Kast has also proposed eliminating the capital gains tax on low value equity trades to encourage retail investor participation in Chile’s capital markets. The measure seeks to improve the attractiveness of Chile’s financial sector for both domestic and foreign investors.
Another cornerstone element of the envisaged reform is the reinstatement of the fully integrated tax system, in place until 2014. Kast argues that the current semi integrated model distorts the taxation of labor and capital income and introduces complexities that disproportionately discourage domestic investors. Restoring the integrated system is viewed as a way to simplify tax structures, enhance neutrality, and return Chile to a framework associated with periods of stronger economic performance. Among Kast’s supporters, the integrated system is seen as a more coherent path for fostering investment and entrepreneurship.
In addition to tax reforms, the administration has stated its intention to modernize tax administration and reduce compliance burdens. Kast has repeatedly criticized the Chilean system as overly bureaucratic, creating inefficiencies for businesses and complicating interactions with the tax authority. Modernization efforts may include procedural simplification, increased digitalization, and the streamlining of regulatory requirements, all aimed at improving the business environment and encouraging formal investment.
However, the broader fiscal landscape introduces complexity. Chile’s national accounts have shown signs of strain, with repeated failures to meet structural deficit targets and rising public debt levels. Fitch Ratings and other analysts have cautioned that social spending pressures remain high and that the economic gains expected from tax cuts may not materialize quickly enough to offset immediate revenue losses. Kast has pledged to cut approximately USD 6 billion in spending over his first 18 months in office, but experts note that even with these measures, fiscal constraints may limit the scope and pace of tax reductions. This tension suggests that the administration may face trade offs between stimulating investment through tax incentives and maintaining macroeconomic stability.
For multinational groups evaluating reorganizations or cross border restructuring, it is important to note that the Chilean Tax Authority recently issued guidance confirming the application of the neutral reorganization regime to international transactions, including share contributions, spin offs, and in kind distributions. These clarifications stem from amendments enacted in 2024 under Law 21,713 and have been reinforced through rulings issued in 2025–2026. Although they precede Kast’s presidency, these developments align with themes of tax certainty and simplification and may offer planning opportunities as the new administration works to encourage investment.
Overall, Chile appears poised for a significant reorientation of tax policy under President elect Kast. The general direction is clear: a reduced tax burden on investment, renewed emphasis on market oriented policies, and efforts to lower administrative barriers. Nevertheless, the final outcome will be shaped by political negotiation, fiscal constraints, and the pace at which the new government can convert policy objectives into enacted law. Multinationals and investors should closely monitor developments throughout 2026, as both opportunities and uncertainties are likely to emerge during this transition period.