The Megareform includes a gradual reduction in the corporate tax rate, restores the tax system, and establishes transitional benefits for investments, donations, and asset regularization.
On Tuesday, August 4, the Senate approved the last pending provision of the National Reconstruction and Economic and Social Development Bill, which is now just steps away from being enacted into law.
The recently approved Mega-Reform introduces significant changes to the Chilean tax system, combining permanent structural changes with a series of transitional measures that establish opportunities for tax planning and regularization subject to specific deadlines.
While many of its provisions will take effect gradually between 2027 and 2029, others will need to be evaluated promptly once the law is published, as they involve limited application windows.
In this azAlert, we present the main changes and considerations that we believe are most relevant for companies, investors, and individuals.
The Mega-Reform incorporates permanent changes aimed at gradually reducing the corporate tax burden, reforming the tax system, incentivizing certain economic activities, and establishing new benefits for taxpayers.
In addition, it includes various transitional measures that allow taxpayers to regularize certain tax situations, access specific benefits, or take advantage of time-limited incentives.
Among the main measures are:
- A gradual reduction in the First Category Income Tax (IDPC) rate from 27% to 23%.
- Gradual restoration of the tax system through the elimination of the IDPC credit refund.
- Elimination of the flat tax applicable to certain capital gains from stock market transactions.
- New tax incentives for the export of knowledge-based services.
- Tax exemption for individuals over 65 who meet the legal requirements.
- New tax regime for housing covered by DFL-2.
- Tax stability statute for large-scale investments.
- New audit and information-sharing powers for the Internal Revenue Service.
In addition, various transitional measures are established, including:
- Temporary VAT exemption for the first sale of certain homes.
- Reduction of the gift tax.
- Voluntary declaration of assets and income held abroad.
- Substitute tax on certain historical profit records.
- Special programs for the forgiveness and regularization of tax and municipal debts.
Main permanent changes
1. Gradual Reduction of the First-Category Tax
This measure progressively reduces the First-Category Tax rate for taxpayers under the general tax regime, lowering it from the current 27% to 23% as a permanent rate starting in the 2029 fiscal year.
The reduction will be gradual:
2027: 25.5% 2028: 24% Starting in 2029: 23%
The Pro Pyme regime retains its special treatment.
This amendment aims to reduce the corporate tax burden and strengthen investment.
2. Reintegration of the Tax System
It gradually eliminates the First-Category Tax credit refund mechanism, moving toward an integrated system.
In practice, this means that the credit available to owners will gradually increase until it reaches 100% for credits generated starting in the 2029 fiscal year.
This change will affect the planning of dividends, withdrawals, and profit distributions.
3. Incentives for Knowledge-Based Services
A new tax credit is being introduced for companies that export knowledge-based services provided from Chile.
The benefit corresponds to a percentage of the wages paid to employees involved in these activities, specifically encouraging the development of technology industries and high-value-added services.
4. Benefits for Employees with Catastrophic Illnesses
It introduces a tax credit for companies that finance treatments for catastrophic illnesses suffered by their employees and certain members of their households, subject to the requirements established by law.
5. Capital Gains from Stock Market Transactions
The 10% flat tax applicable to certain capital gains realized on the sale of publicly traded shares and units is eliminated; such gains are once again treated as non-taxable income.
6. Benefits for Seniors
Individuals aged 65 or older may qualify for a 100% exemption from property taxes on a residence used as their primary home, provided they meet the requirements set forth in the regulations.
7. New Regime for DFL-2 Housing
A single 5% tax is established on income derived from the rental of DFL-2 housing, effective starting with the third property subject to this regime, while the traditional treatment remains in effect for the first two.
8. Tax Stability Statute
It introduces a new tax stability mechanism for large-scale investment projects—both domestic and foreign—through contracts entered into with the government.
Its objective is to provide greater legal certainty regarding the applicable tax burden during the development of strategic projects.
9. Strengthening the Powers of the Internal Revenue Service (SII)
The powers of the Internal Revenue Service (SII) to request and cross-check information with various public agencies are expanded, thereby strengthening tax audit and enforcement tools.
Transitional Measures with the Greatest Impact
In addition to the permanent changes, the Mega-Reform includes a series of benefits whose implementation will depend on specific timeframes beginning from the law’s publication.
1. Temporary VAT Exemption for Housing
A temporary VAT exemption is established for the first sale of certain homes that meet the requirements set forth in the law.
The measure will remain in effect for one year.
2. Reduction in gift tax
For one year, a 50% reduction in the tax applicable to certain gifts will be available, subject to the conditions and limits set forth in the regulations.
3. Regularization of Assets Held Abroad
An extraordinary procedure is being established to voluntarily declare assets and income held abroad through the payment of a substitute tax.
Depending on compliance with certain requirements, the rate may be 10% or reduced to 7%.
4. Substitute Tax on Historical Records
A voluntary mechanism is established to regularize certain historical balances through a one-time 10% tax, thereby simplifying future taxation with respect to those records.
5. Special Regularization Programs
It includes temporary benefits to facilitate the regularization of tax and municipal debts, including significant waivers of interest and fines for those who meet the legal requirements.
Issues to Evaluate Now
The passage of the Mega-Reform creates significant opportunities to review tax and estate structures before several of its provisions take effect.
In particular, it is advisable to evaluate:
- The impact of the gradual reduction in First Category Tax.
- Dividend and profit distribution planning, taking into account the reintegration of the system.
- The advisability of taking advantage of transitional measures, especially those subject to short deadlines.
- The status of investments held abroad and any potential regularization processes.
- Wealth and estate planning in light of the new incentives regarding gifts.
- Real estate transactions that may benefit from the transitional measures.
- The strengthening of internal tax compliance processes in light of the new audit powers granted to the Internal Revenue Service.
Final Considerations
The 2026 Mega Tax Reform represents one of the most significant changes to the Chilean tax system in recent years.
Following its approval by Congress, the next steps in the legislative process are presidential vetoes and review by the Constitutional Court, after which it will be enacted as law in the Official Gazette.
Its effects extend to companies, investors, and individuals alike, combining long-term structural changes with transitional opportunities that must be analyzed on a case-by-case basis.
Given the diversity of the measures included and their varying implementation timelines, it is advisable to review their impact on each business or estate structure in a timely manner, in order to make informed decisions and take full advantage of the benefits provided by the new regulations.
For more information on these topics, please contact:
Rodrigo Albagli | Partner | ralbagli@az.cl
Álvaro Rosenblut | Partner | arosenblut@az.cl
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