Chile’s Kast Unveils Sweeping Tax and Investment Megareform on TV

Kast won the presidency with 58%. His approval is 47% one month in. The national broadcast was the pivot from governing by decree to governing by law, and the package reads like a manifesto for the second half of his term before the first half has even finished.

The Kast Chile economic reform announced in a cadena nacional on Wednesday night is the most ambitious pro-investment package presented to Chile’s Congress since the Boric government’s failed tax proposal. The Rio Times, the Latin American financial news outlet, reports that President José Antonio Kast—who won the December 2025 runoff with 58% and took office on March 11—used his first national address to demand “urgency and high-mindedness” from Congress on a 40-measure Proyecto de Ley de Reconstrucción y Desarrollo Económico y Social that combines corporate tax cuts, capital repatriation incentives, housing-market stimulus, and targeted reconstruction spending for regions devastated by fires.

The Five Pillars of Kast’s Megareform

The plan is built around five pillars. The first is reconstruction, with 400 billion pesos added to the emergency fund for fire-affected regions, a 50% reduction in donation taxes, and new capital-repatriation mechanisms to finance rebuilding. The second is a revival of the construction sector, anchored by a transitory VAT exemption on new home sales designed to unstick the inventory of unsold units.

The third pillar is tax competitiveness: the corporate rate falls from 27% to 23%, which the government pitches as alignment with the OECD average and says will benefit 150,000 firms employing more than half of the formal labor force and concentrating 90% of Chilean investment. A payroll tax credit worth US$1.4 billion annually targets 235,000 SMEs. The fourth pillar—juridical certainty—reinstates the invariabilidad tributaria that guarantees investors a fixed tax regime for 25 years, plus a 12-month window to repatriate foreign-held capital at a 7% flat rate conditional on reinvestment in Chile.

The fifth pillar is public-spending containment. The government will triple voluntary retirement quotas in the public sector, crack down on medical-leave abuse, and expand the powers of the SII tax authority. Combined, these measures are pitched as financing a campaign promise to exempt elderly Chileans from property tax contributions on their primary homes.

Why Now: Approval, Fuel, and the Fiscal Hole

The timing is political. Kast’s approval fell from roughly 51% at inauguration to 47% after his government’s decision not to apply the MEPCO stabilization mechanism and pass through the full 54% fuel-price hike from the Iran war’s oil shock. Fifty-nine percent of Chileans told pollsters the fuel move could have been avoided, and the MEPCO non-application alone added almost 0.3 percentage points to the unusually high 1.0% March CPI.

The fiscal numbers are worse than the inflation numbers: Chile closed 2025 with a structural deficit of 3.6% of GDP—the highest in two decades—and an IMACEC that fell 0.3% in February against expectations of growth. With full-year growth at just 2.5% and inflation at 3.5%, the Kast team is arguing that only an aggressive pro-investment agenda can break what the president called the “stagnation-unemployment-bureaucracy cycle.” Kast explicitly attacked the Boric-era tax reforms that promised US$8.2 billion in additional revenue but “never arrived, while growth fell from 5% to 2%, investment contracted, and public debt tripled.”

The Opposition Response and the Congressional Arithmetic

The left opposition immediately framed the package as a “covert tax reform benefiting the super-rich,” and Kast’s own pre-emptive response—“I know there will be voices saying this project favors those who have the most, but that objection does not withstand the data”—confirmed the defensive positioning. University of Chile economist Jorge Berríos told BioBioChile that the 100% corporate-to-personal tax integration credit “will not pass under any circumstances,” while valuing the elderly property-tax exemption. Political analyst Tomás Duval warned that fragmentation in Congress makes a September timeline “difficult.”

The arithmetic is genuinely hard: Kast’s right-wing coalition controls neither chamber outright, and while the reconstrucción fund and fire relief measures have broad support, the corporate tax cut and capital repatriation scheme do not. The government’s play is to bundle them under one bill and use the reconstruction branding to pressure moderate opposition into voting yes. Whether that works depends on whether the Partido Socialista and the remains of Boric’s Frente Amplio will trade tax cuts for fire relief or block the package and force Kast to re-present it piece by piece.

What Markets and the Region Are Watching

The megareform is the first major opposition-style liberal platform to land in any Latin American economy in 2026 outside Milei’s Argentina, arriving the same week that Brazil’s Romeu Zema is unveiling his own Milei-style economic plan in São Paulo. For investors, the 25-year tax invariability guarantee is the headline because it explicitly reverses the regulatory uncertainty that drove the 2014-2025 investment slowdown, and the 7% capital repatriation rate is the first serious Chilean attempt to compete for the mining and fintech capital that has been flowing to Peru, Mexico, and the United States. The risks are real—a 2.4% IMF growth projection for 2026, a 3.6% deficit, a Congress that can kill the corporate tax cut—but as a signal to the region that pro-market orthodoxy is back in play in the most institutional Latin American economy, the cadena nacional did its job.

Related Coverage: Brazil’s Zema Launches Milei-Style Plan • IMF WEO: Latin America Grows 2.3% • Argentina Inflation March 2026

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