Chile · Investing
Key Facts
—Corporate tax cut The reform gradually lowers the corporate income tax rate from 27% in 2026 to 23% by 2029, directly boosting net profits for profitable Chilean firms.
—Capital gains tax eliminated The 10% tax on capital gains from publicly traded securities will be removed, making Chilean equities more attractive for both local and foreign portfolio investors.
—Full tax integration restored The bill restores full integration of personal and corporate taxes, reducing the overall tax burden on distributed dividends for resident shareholders.
—Foreign investor certainty A 25-year tax stability regime and a guaranteed maximum effective income tax rate of 35% for foreign investors are included, lowering political risk for large projects.
—Asset regularization window A voluntary 12-month regime lets taxpayers declare foreign assets and income at a reduced 10% tax rate, or 7% if funds are repatriated and kept in Chile for five years.
Investment bank JP Morgan has reinforced its bet on the Chilean equity market, identifying Santander Chile, Falabella, LATAM Airlines and SQM as the key stock winners from Chile’s tax megareforma currently under Senate debate.
The JP Morgan shortlist in context
JP Morgan has reinforced its bullish stance on Chilean equities as the Senate votes on a wide-ranging tax reform bill, known locally as the ‘megarreforma.’ The U.S. bank named financial giant Santander Chile, department-store and bank operator Falabella, regional carrier LATAM Airlines, and lithium leader SQM as its top recommended portfolio names, calling them the companies most favored by the proposed changes.
These four firms collectively represent a cross-section of Chile’s real economy: consumer banking, retail and credit cards, air travel demand, and strategic mineral export. A lower corporate tax rate and the elimination of capital gains taxes on publicly traded shares are expected to directly improve their after-tax earnings and appeal to global fund managers.
What the tax bill actually changes
The centerpiece of the reform is a scheduled cut in the first-category corporate income tax rate. According to consulting firm PwC, the rate would decline from its current 27% in 2026 to 25.5% in 2027, 24% in 2028, and reach 23% from 2029 onward. Combined with the restoration of full tax integration between corporate and personal taxes, this reduces the total levy on profits distributed as dividends.
For market participants, a critical change is the removal of the 10% tax on capital gains from the sale of publicly traded securities, effective January 1, 2027, as confirmed by KPMG. The bill also introduces a significant sweetener for large-scale international capital: a 25-year tax stability regime for qualifying investments and a guaranteed maximum effective income tax burden of 35% for foreign investors, excluding the mining royalty.
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Why this matters for expat and foreign investors in Chile
For an expat or foreign national holding a Chilean brokerage account, the elimination of the 10% capital gains tax on stock sales is a direct increase in after-tax returns. A trade that previously gave up a tenth of its gain to the tax authority would, under the new regime, deliver the full profit to the investor, making the Santiago bourse more competitive with other Andean markets.
For larger institutional investors, the 25-year tax stability clause and the 35% effective tax cap drastically reduce long-term fiscal uncertainty. A project approved under the stability regime locks in the tax rules for a quarter-century, a provision that JP Morgan’s research implicitly endorses by highlighting companies like SQM, whose lithium expansion plans require precisely this kind of multi-decade legal predictability.
The voluntary repatriation and regularization regime
Beyond corporate rates and market taxes, the bill creates a 12-month voluntary disclosure window for taxpayers with undeclared foreign assets or income. The regime allows taxpayers to regularize their situation by paying a flat 10% tax on the assets. PwC details that the rate drops further to 7% if the funds are repatriated to Chile and maintained in the country for at least five years.
This measure is designed to broaden the tax base and attract offshore Chilean wealth back into local financial instruments, including the very equities JP Morgan is recommending. The combination of a tax amnesty with a falling corporate rate creates a potential near-term inflow of capital that could support valuations for Falabella, Santander Chile, and their peers.
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Frequently Asked Questions
Which companies did JP Morgan explicitly name as the top stock winners from Chile’s tax reform?
JP Morgan’s recommended equity portfolio for the reform names Santander Chile, Falabella, LATAM Airlines, and SQM as the prime beneficiaries.
When will the capital gains tax on publicly traded shares be eliminated in Chile?
KPMG notes the elimination of the 10% tax on capital gains from publicly traded securities is slated for January 1, 2027, under the proposed bill.
What is the new corporate income tax rate schedule under the proposed Chilean reform?
According to PwC, the corporate rate drops from 27% in 2026 to 25.5% in 2027, 24% in 2028, and 23% from 2029 onward.
Sources: JP Morgan apuesta por Santander, Falabella, LATAM y SQM como las más empresas más beneficiadas con la megarreforma, How Chile’s Tax Reform Bill Could Reshape Investment Planning, KPMG Flash Alert: Chile – Tax reform bill submitted to congress, PwC Chile Tax Newsletter: Government submits Bill for National Reconstruction and Economic Development
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