Chile: Legislative changes include tax measures

Legislative changes that are effective 1 April 2022 include tax measures

Legislative changes that are effective 1 April 2022 include tax measures

The provisions in Law No. 21,420 (4 February 2022) are generally effective 1 April 2022. 

Regarding income tax, the legislation:

  • Repeals a 4% credit allowed for purchases of fixed assets by companies with an average annual revenue exceeding UF 100.00.
  • Establishes a single tax rate of 10% on capital gains realized from transactions described in article 107 of the corporate income tax law. For the calculation of such capital gains, there is an election allowing taxpayers to use the value as of the date of acquisition or the official closing price as of 31 December of the year of acquisition. This tax will not apply to institutional investors.
  • Provides losses are not deductible as an expense and instead must be deducted only from income of the same type (whereas profit is considered income subject to tax).
  • Provides that for non-resident taxpayers, the acquirer or stockbroker will be required to withhold tax, at a rate of 10% on the capital gains or 1% of the total amount of the disposition.
  • Modifies the tax treatment of lease contracts.

Regarding inheritance and gift taxes, the legislation provides that tax is levied on sums that life insurance policy beneficiaries are entitled to receive at the death of the insured, excluding disability and survival insurance.

The legislation also includes the measures concerning the land tax (impuesto territorial), such as an increase in the rate of territorial tax surcharge to 0.425% (from 0.275%). Regarding value added tax (VAT), the legislation repeals a special credit allowed construction companies and modifies the “basic taxable event of services.”

The legislation establishes an annual tax (imposed at a rate of 2%) on certain luxury goods such as helicopters and airplanes as well as certain yachts and automobiles.

Read a February 2022 report (Spanish and English) [PDF 872 KB] prepared by the KPMG member firm in Chile

Other topics discussed in this report include:

  • Appearance and representation of taxpayers before the SII (Servicio de Impuestos Internos)
  • General tax return and recovery procedures in accordance with the VAT law
  • Project management and administration services and engineering services
  • Intermediary services in foreign money transfer transactions
  • Tax credit for construction of commercial real estate
  • Tax treatment of goodwill
  • Merger with a foreign company
  • Taxation of income of a branch in Peru
  • Date of acquisition of shares of a company from a division process


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