Chile's National Reconstruction Law: Key Takeaways for Companies and Foreign Investors
Updated: Oct 28
Chile's National Reconstruction Law is now part of the country's legal framework: it was published in the Official Gazette on October 17, 2026 as Law 21,850, and most of its provisions take effect on November 1. Between its approval by Congress in August and its publication, the bill went through a presidential veto and review by the Constitutional Court, which removed some of the provisions discussed in the previous version of this guide. What remains is a far-reaching tax reform: it lowers the corporate income tax, moves back toward full integration of corporate and shareholder taxes, creates a tax-stability regime and opens time-limited windows for several benefits. Below we explain, with the official text at hand, what changed, when it applies and which decisions are worth making now.
1. What changed between the bill and the published law
The law was enacted on October 9 and published on October 17, 2026. As a general rule, its provisions apply from November 1, 2026, except those with a specific effective date; several of the most relevant ones for companies begin on January 1, 2027. You can read the official text of Law 21,850 (in Spanish) on the Library of the National Congress website.
Compared with the bill we analyzed in August, there are two important differences. First, the President issued a veto with three objections, which both chambers of Congress approved. As a result, the "financial right to be forgotten", the outright ban on compound interest (anatocismo) and the ban on invoice payment terms longer than 30 days are not part of the law.
Second, in its ruling of August 26, 2026, the Constitutional Court struck down, among other provisions, the rules that required the State to compensate project owners whose Environmental Qualification Resolution (RCA) was annulled. Articles 12 and 13 of the published law, which set out the procedure for that compensation, remain in the text but no longer have a substantive rule to apply. In practice, "reimbursement of expenses" for annulled environmental permits is not a tool companies can rely on today.
2. Gradual reduction of the corporate income tax
For companies under the general regime (Article 14, letter A, of the Income Tax Law), the First Category Tax rate falls in steps by business year: 27% in 2026, 25.5% in 2027, 24% in 2028 and 23% from 2029. The law also adjusts the monthly provisional tax payments for January through March of 2027, 2028 and 2029 so that advance payments reflect the lower rate.
Small and medium-sized companies under the general Pro Pyme regime keep the temporary rate set by Law 21,755 (12.5% through 2027 and 15% in 2028, provided the employer pension contribution required by the pension reform is in place) and, from 2029, converge to 23% instead of the 25% that applied until now. Reviewing each company's structure and tax regime is the first step, as we explain in our guide to corporate legal advice in Chile.
3. Integration, capital gains and the substitute tax
From January 1, 2027, the reform eliminates the obligation to repay 35% of the First Category Tax credit that currently applies to owners of companies under the general regime. The change is gradual: the repayment drops to 30% for credits generated in business year 2027 and to 20% for those generated in 2028, and disappears afterwards. Credits accumulated up to December 31, 2026 are still allocated under the rules in force on that date and are used first. Once the transition is complete, the tax paid by the company will again be fully creditable against its shareholders' final taxes.
Also from January 1, 2027, gains on the sale of shares with stock-market presence (Article 107 of the Income Tax Law) are no longer subject to the 10% single tax and become non-taxable income.
In addition, companies that at the close of 2025 or 2026 have positive balances in the FUR or STUT records (accumulated reinvested and taxable profits), or excess withdrawals not yet allocated, may pay a 10% single substitute tax on all or part of those balances, without the associated credits. Profits taxed this way move to the REX record and can be withdrawn free of final taxes. The option expires eight months after publication, on June 17, 2027, and is worth assessing with our corporate law team.
4. Tax stability for large investments
From January 1, 2027, foreign and local investors with mining, industrial, forestry, energy, infrastructure, telecommunications, research and technological development, medical or scientific projects of at least USD 50 million may sign a contract with the Ministry of Finance, following a report from the Foreign Investment Promotion Agency (InvestChile), that locks in the income tax burden in force on the date it is signed. The term depends on the amount: 10 years from USD 50 million, 15 years from USD 100 million and 20 years from USD 350 million, counted from the project's start of operations. The contract may also lock in VAT and customs duties on imported capital goods and, for mining projects, the mining royalty.
This certainty comes at a cost and with conditions: the First Category Tax rate set in the contract is increased by 1.5%; the receiving company must have its financial statements audited, file them with the Financial Market Commission (CMF) and keep separate accounts for the project; and its related-party debt may not exceed three times its tax equity. Stability is also lost upon a conviction for a tax offense or if the investor falls within the scenarios of the general anti-avoidance rule. Disputes go to mediation before the Agency and, if that fails, to arbitration, which does not extend to the Chilean IRS's (SII) audit powers.
For those structuring an investment from abroad, this regime fills the space left by the former Decree Law 600. We handle it directly through our foreign investment practice.
5. Employment and training: what was actually approved
The employment credit ended up narrow in scope. From November 1, 2026, it benefits companies keeping full accounting records that export knowledge-based services, meaning services that can be delivered remotely to clients with no domicile or residence in Chile and that Customs classifies as exports. It equals 15% of the share of payroll linked to those exports (20% if the company and its employees are located outside the Santiago Metropolitan Region or in its rural municipalities), capped at 75 UTM (monthly tax units) per employee per year.
From January 2027, employers that directly pay the co-payment for treatment of catastrophic illnesses of their employees, spouses, civil partners or children up to age 25 can claim a credit of up to 150 UTM per employee over the whole employment relationship. The employee must have at least two years of service and be up to date on social security contributions, and the benefit does not apply to shareholders owning 10% or more of the company or to their relatives.
On the other hand, the Sence training tax benefit falls from 1% to 0.7% of taxable payroll and covers only between 15% and 80% of each course depending on the employee's pay, with the difference not chargeable to the employee. Predominantly recreational activities and purely self-study courses no longer count as training. Training plans should be reviewed from an employment law perspective.
6. Time-limited windows to regularize
The law opens temporary opportunities that are worth putting on the calendar:
Repatriation of capital: from January 1, 2027 and for twelve months, persons domiciled or resident in Chile may declare undeclared assets and income held abroad and acquired before 2026 (including crypto-assets), paying a 10% single tax. The rate drops to 7% if the assets are brought into Chile within three years of the law's publication and remain invested in the country for at least five years.
Payment agreements with the Treasury: until mid-April 2027 (180 days from publication), individuals and micro, small and medium-sized companies may pay tax debts due up to December 31, 2025 with a waiver of up to 100% of interest and 80% of penalties if paid in full, or up to 95% and 75% under installment agreements of up to 48 payments with a 10% down payment.
Municipal debts: unpaid business licenses, vehicle permits, waste collection fees and other municipal charges accrued between 2023 and 2025 can be regularized with a full waiver of interest and penalties, by applying to the municipality between December 1, 2026 and November 30, 2027.
Repatriation does not exempt anyone from anti-money laundering rules: it is not available to anyone convicted, formally charged or prosecuted for money laundering, tax offenses or offenses under Law 20,393 (corporate criminal liability), or to anyone who already received an SII summons, assessment or tax bill before 2026 concerning those assets. Nor can assets located in high-risk or non-cooperative jurisdictions identified by the FATF be declared.
7. Family wealth and real estate
For individuals and business families, the reform includes time-limited planning tools:
Gifts: a 50% reduction in gift tax, once per donor, for gifts to forced heirs (legitimarios) or beneficiaries of the "fourth of improvements" (cuarta de mejoras) made by public deed between December 1, 2026 and November 30, 2027. The gifts may not exceed 50% of the donor's net worth, and the donor must declare that they hold assets worth at least twice the amount given. These gifts are exempt from prior court approval (insinuación), and if the recipient sells the asset within three years, the lower tax cost applies.
Property tax: from January 1, 2027, individuals aged 65 or older are fully exempt from property tax on their main residence, including its parking spaces and storage units, even if they own other properties (which remain taxable). They must file an annual sworn statement with the SII and be up to date on waste collection fees and the previous year's property tax. Obtaining the exemption through false statements or simulated residence is punished with a fine of 300% of the evaded tax and a ten-year bar from the benefit.
VAT on new homes: for one year from December 1, 2026, the first sale of homes whose final municipal approval predates October 17, 2026 may be exempt from VAT, without the seller losing its VAT credit. Sales executed since the bill was submitted that paid VAT may obtain a refund if the seller returns it to the buyer.
DFL 2 rentals: from 2027, individuals renting their third "economic home" (vivienda económica, up to 90 m²) onwards to unrelated parties may opt for a 5% single tax on gross rent. Buyers of new economic homes of up to 140 m² purchased by October 17, 2027 may also use this tax for their rental income.
These rules matter to developers and buyers; we cover them through our real estate and construction practice and, for non-residents, in our guide to buying property in Chile as a foreigner.
8. Permits, enforcement and what to do now
On permits, the deadline to invalidate administrative acts is cut from two years to one, challenges to Environmental Qualification Resolutions are channeled through a special administrative appeal, and court injunctions suspending them last thirty days, renewable up to a maximum of six months unless there is a serious risk. At the same time, the Chilean IRS (Servicio de Impuestos Internos) may cross-check data with all State administrative bodies for audit purposes, and the Treasury will take over collection of overdue municipal business licenses and waste collection fees.
More benefits with conditions attached, and greater enforcement capacity, mean mistakes will be detected sooner. We recommend:
Reviewing corporate structure and withdrawal policy in light of the new rate and integration.
Assessing the substitute tax on FUR, STUT or excess withdrawals before June 17, 2027.
Analyzing tax stability for investment projects in the pipeline.
Scheduling the windows for gifts, repatriation and payment agreements.
Preparing for audits and, if a summons or assessment arrives, having a defense in place through our dispute resolution practice.
Summary
Law 21,850 was published on October 17, 2026; most of its provisions apply from November 1, and several tax provisions from January 1, 2027.
The corporate income tax under the general regime falls to 25.5% (2027), 24% (2028) and 23% (2029), and the credit repayment is gradually eliminated.
Tax stability offers 10, 15 or 20 years of certainty for investments from USD 50 million, with a 1.5% surcharge on the agreed rate.
There are time-limited windows: a 10% substitute tax (until June 17, 2027), gifts with a 50% tax reduction, repatriation of capital and payment agreements with the Treasury.
The financial right to be forgotten, the compound interest ban and the ban on payment terms over 30 days were vetoed, and compensation for annulled environmental permits no longer applies.
Frequently asked questions about Chile's National Reconstruction Law
When does the National Reconstruction Law take effect?
Law 21,850 was published on October 17, 2026. As a general rule it applies from November 1, 2026, but the rate cut, the end of the credit repayment, tax stability and the property tax exemption begin in 2027.
How much will the corporate income tax fall?
Under the general regime, the First Category Tax rate goes from 27% to 25.5% in 2027, 24% in 2028 and 23% from 2029. Pro Pyme companies keep the reduced rate under Law 21,755 through 2028 and then converge to 23%.
What happened to the financial right to be forgotten and the 30-day payment rule for SMEs?
Both provisions, together with the compound interest ban, were removed by the President's veto, which Congress approved. They are not part of the published law, so the previous rules still apply.
Who can apply for tax stability?
Foreign and local investors with projects of at least USD 50 million in sectors such as mining, energy, infrastructure or technology. They must sign a contract with the Ministry of Finance and accept a 1.5% increase in their First Category Tax rate.
Do I need to own only one property to be exempt from property tax?
No. The exemption benefits people aged 65 or older on their main residence, even if they own other properties, which remain taxable. An annual sworn statement with the SII is required, and waste collection fees and property tax must be up to date.
Which tax reform deadlines expire first?
Payment agreements with the Treasury expire in mid-April 2027 and the substitute tax on FUR, STUT or excess withdrawals on June 17, 2027. Discounted gifts, the VAT exemption on new homes and the regularization of municipal debts run until November 30, 2027, and repatriation of capital throughout 2027.
How Varela Abogados can help
At Varela Abogados we advise companies, business families and local and foreign investors on planning and carrying out their decisions under the National Reconstruction Law, through our corporate law and foreign investment practices. Book a meeting at varelaabogados.cl and let's review how the new law affects you.
The information in this article is for general informational purposes only and is based on the text of Law 21,850 published in the Official Gazette on October 17, 2026, whose application will be subject to the instructions issued by the Chilean IRS (Servicio de Impuestos Internos) and other competent authorities. It does not constitute legal advice and is no substitute for consulting a lawyer about your particular situation. For specific guidance on your case, please contact our team directly.
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