Chile Small Business Tax: Kast Keeps 12.5% Rate Permanent

The meeting delivered Kast’s first concrete economic policy signal since taking office. It also confirmed that Chile’s new government will differentiate sharply between big-corporate tax reform and small-business tax treatment — a combination the previous Boric administration never attempted.

The Rio Times, the Latin American financial news outlet, reports that Chile PyME tax policy has received its most concrete definition yet under the Kast government. President José Antonio Kast committed on April 23 to keep the 12.5% first-category corporate tax rate on micro, small, and medium enterprises permanent — reversing a scheduled rise to 23% that was embedded in the Reconstrucción Nacional bill sent to Congress the day before.

The commitment was delivered at a La Moneda lunch meeting that ran more than two hours, with Kast accompanied by his Finance Minister Jorge Quiroz, Interior Minister Claudio Alvarado, Economy Minister Daniel Mas, and government spokesperson Mara Sedini. Absent was Segpres chief José García Ruminot, who cited agenda conflicts.

Why the Chile PyME tax decision matters for the broader reform

Kast’s Reconstrucción Nacional bill proposes a reduction of the general corporate tax rate from 27% to 23% — aligning it with the current PyME rate schedule after 2029. The original bill would have progressively lifted PyMEs from 12.5% to 23% to unify the system.

That unification triggered immediate pushback. PyME associations argued that the reduction for large firms accompanied by an increase for small ones inverted the burden: big business wins, small business loses. “We were worried that the given word would not be respected, but it was ratified by the President and his ministers,” Héctor Sandoval of Conapyme told reporters after the meeting.

By separating the PyME treatment into a standalone bill, Kast’s team preserves the large-corporate tax reduction while keeping the small-business rate flat. The outcome is a two-tier system where PyMEs pay 12.5% permanently and larger firms pay 23%, with the 10.5-point gap intended as a sustained support for smaller employers.

Who qualifies for the 12.5% Chile PyME tax rate

The 12.5% rate applies to companies enrolled in Chile’s Pro-PyME tax regime administered by the Servicio de Impuestos Internos. The regime is designed for micro, small, and medium enterprises with average annual revenues up to 75,000 Unidades de Fomento — approximately US$3 million at current exchange rates.

The Multigremial Nacional of Juan Pablo Swett, one of the most vocal PyME associations in the meeting, confirmed the structure will include exempt brackets for the smallest firms, progressive intermediate rates of 5% to 7%, and the 12.5% headline rate for full-sized PyMEs.

A single-window regulatory procedure (ventanilla única) and mandatory 30-day payment terms will also be folded into the Estatuto PyME bill. Sandoval of Conapyme said a formal “mesa pro-pyme” working group will draft the technical text.

The Congressional arithmetic Kast now has to solve

Kast’s Republican Party and its allied Chile Vamos bloc do not control a majority in Congress. Passing two separate tax reforms in the same administration — the general-rate reduction and the separate PyME bill — requires coalition discipline Chile has not produced in the past three decades.

Swett acknowledged the risk before the meeting: “In the last 36 years, there has not been any government that managed to pass two tax reforms in its period.” The Multigremial leader’s own framing is that the PyME bill is “complicated” even with the commitment Kast delivered.

The timing matters. Under the current schedule, the PyME rate rises in late 2027 or early 2028.

The Estatuto PyME must therefore pass Congress before that window to preserve 12.5%. If it does not pass, the Reconstrucción Nacional schedule — with PyMEs rising to 23% — would take effect by default.

Where the Chile PyME tax commitment lands politically

Kast took office in March 2026 after winning the December 2025 runoff. This is the first concrete economic policy action his government has delivered, and it arrives at a sensitive moment — Pulso Ciudadano’s April 19 poll showed Kast’s approval at 33%, below the honeymoon level usually associated with new Chilean presidents.

A visible win with small and medium enterprises — politically a centre-right-friendly constituency — is strategically useful. The meeting itself generated cooperative coverage in Chilean media, with headlines emphasising that sector leaders “left satisfied” and that the government had “respected the given word.”

The decision also reinforces Kast’s broader governing template: deliver concrete commitments to specific constituencies rather than broad ideological moves. The Venezuelan deportation executive order earlier this month followed the same pattern — a defined, narrow policy change with a specific voter bloc in view.

What to watch after the Chile PyME tax meeting

Three variables now define the path. The first is the Estatuto PyME bill text. The mesa pro-pyme working group’s output will determine whether the 12.5% commitment translates into durable legislation or into a promise that runs into Congressional arithmetic.

The second is the general-rate reform. If the 27%-to-23% reduction passes Congress first and the PyME bill stalls, PyMEs face the 2028 rate rise as a default — undoing the commitment delivered this week.

The third is fiscal cost. Keeping 12.5% permanent forgoes the revenue the Reconstrucción Nacional bill had priced in. Finance Minister Jorge Quiroz will need to identify the offset — whether in expenditure cuts, in other tax bases, or in growth assumptions — before the bill reaches budgetary review.

For investors reading the Kast government’s emerging economic template, the Chile PyME tax commitment is the first concrete data point. It signals a centre-right government willing to protect small-business preferential treatment while reducing headline corporate rates — a configuration closer to the Milei blueprint than to the Piñera pattern from the previous Chilean right-wing administration. The question now is whether the legislation catches up with the commitment.

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