Chile’s Kast Tax Reform Passes: What Expats Must Know
Chile · Taxes
Key Facts
- The reform. Chile’s Congress cleared the Kast tax overhaul on 4 August, when the Senate passed the last article 27–22. It is not fully promulgated yet.
- Corporate cut. The corporate tax rate falls gradually from 27 to 23 percent by 2029.
- For older owners. First homes of people over 65 are exempted from municipal property tax.
- Unchanged. The three-year foreign-income exemption, the absence of a wealth tax, and the US treaty all stand.
- Still pending. Three presidential vetoes go back to Congress and the Constitutional Court must rule on a challenge to the tax-stability guarantee before those parts can be promulgated.
Chile’s Congress has cleared its biggest tax reform in years, and for foreign residents the message is mostly reassuring: the rules that make Chile attractive to new arrivals are untouched, while older homeowners pick up a genuine break.
What passed
On 21 July the Chamber of Deputies approved most of President José Antonio Kast’s “National Reconstruction and Economic and Social Development” bill, his biggest legislative win since taking office in March. The vote was 85 in favour to 59 against.
One article, on how municipalities are compensated for that property-tax exemption, was the last to clear: on 4 August the Senate approved it 27 votes to 22, finishing the bill’s passage through Congress in about three and a half months after it was filed in late April. The government secured the votes after UDI’s Gustavo Sanhueza came over — on a commitment to cover municipal-worker pension debt — and the Coquimbo senators Matías Walker and Sergio Gahona traded their support for reconstruction funds for their storm-hit region, with Pedro Araya (PPD) also crossing over. The compensation transfers about US$190 million to municipalities (US$110 million through the municipal common fund and US$80 million directly), conditioned on councils cutting permit-processing times by 30 percent. It is not fully law yet: the government is sending three suppressive presidential vetoes — on an anatocismo (compound-interest) provision, a “financial right to be forgotten” and a 30-day payment rule for small firms — and the opposition has asked the Constitutional Court to strike the tax-stability guarantee and an environmental-restitution article, which cannot be promulgated until the court rules.
The corporate cut
The headline measure lowers the corporate income-tax rate from 27 percent toward 23 percent by 2029, phased through the intervening years (25.5 percent in 2027, 24 percent in 2028, 23 percent from 2029). The government framed it as restoring Chile’s tax competitiveness for investment.
The reform also introduces full reintegration — letting shareholders credit 100 percent of corporate tax — eliminates the capital-gains tax, and adds capital-repatriation incentives and a tax-stability guarantee for large investments. Most of it sits on the corporate and investment side rather than personal taxation.
The break for older homeowners
The change that reaches individuals most directly is the exemption of the first home of people over 65 from municipal property tax, the contribuciones. For older expats and retirees who own their home in Chile, that is a real annual saving.
The mechanism for compensating municipalities that lose the revenue is the piece still being finalised, so the exemption’s exact operation may be confirmed shortly.
What did not change
For arriving remote workers and new residents, the rules that matter most are untouched. Chile still taxes new arrivals only on Chilean-source income for their first three years. The law lets the tax authority extend that window in qualified cases on application; it does not set a fixed second three-year term.
Chile still has no wealth tax, and its income-tax treaty with the United States, which entered into force in December 2023 and has applied since 2024, remains. The reform does not alter the foreign-income runway that draws remote workers.
That combination is why the reform matters more for what it preserves than for what it changes. The headline corporate cut is aimed at foreign direct investment and large projects, while the levers that shape a typical expat’s tax bill — the three-year window on foreign income, the absence of a wealth tax and the US treaty — were deliberately left untouched. For a remote worker weighing Chile against a neighbour, the package removes a reason to hesitate without adding a new personal cost.
What it means for foreign residents
The net effect is a friendlier investment climate and a modest, concrete win for older homeowners, with nothing lost for new arrivals. It reinforces rather than changes the case for moving to Chile.
The corporate cut is phased and the municipal-compensation detail is unfinished, so confirm timing and any personal impact with a Chilean accountant. This is general information, not tax advice.
More: Chile news in English, every day from The Rio Times.
Frequently Asked Questions
What did Chile’s tax reform change?
It cuts corporate tax from 27 to 23 percent by 2029 and exempts first homes of people over 65 from municipal property tax, among other measures.
Does it affect new residents’ taxes?
No. The three-year exemption on foreign income, which the tax authority may extend on application, is unchanged, as is the absence of a wealth tax.
Who gains from the property-tax change?
Owners over 65, including older expats and retirees, whose first home is exempted from municipal property tax.
Is the reform final?
Not fully. Congress cleared it on 4 August, when the Senate passed the last article 27–22, but three presidential vetoes go back to Congress and the Constitutional Court must still rule on a challenge to the tax-stability guarantee before those parts can be promulgated.
Does Chile still have the US tax treaty?
Yes. The income-tax treaty with the United States, which entered into force in December 2023 and has applied since 2024, is unaffected.
Correction, 2 August 2026: An earlier version of this article said Chile’s tax reform had passed and dated the Chamber of Deputies vote to 22 July. The 85-59 Chamber vote took place on 21 July, and the headline was changed accordingly at the time. (Congress has since cleared the bill on 4 August; see above.) The article also described the Chile-United States tax treaty as in force since 2024; it entered into force in December 2023 and has applied since 2024. A reference to the three-year exemption on foreign income as “extendable to six” has been corrected: the law allows a discretionary extension in qualified cases but sets no fixed six-year limit.
Sources: Chile’s Chamber of Deputies; President Kast’s tax reform.
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