The government’s idea is to reintroduce a mechanism similar to Decree Law 600 (DL 600), which was repealed in the 2014 tax reform, but with some modifications. In this case, it would apply to both foreign and domestic investments.
Expectations are high. The government has promised that the omnibus bill, to be presented to the country this Wednesday evening by President José Antonio Kast, will improve growth, investment, and employment.
To achieve this, one of the key proposals is tax-related, including a reduction in the corporate tax rate from 27% to 23% over a three-year period (from 2028 to 2030), along with the reintegration of the tax system, with the aim of encouraging investment.
Another measure to be included is one that was repealed in the 2014 tax reform: tax invariability. According to those familiar with the proposal, the plan is to reestablish this mechanism to attract both foreign and domestic investment.
The regulation currently being finalized aims to maintain the tax conditions in place at the time the investment enters the country for a period of 20 to 25 years, for projects involving investments of at least USD 50 million.
The idea is to reinstate, albeit with some changes, DL 600, which was created in 1974 and repealed as of 2016 during President Bachelet’s second administration.
This measure established rules for the protection and promotion of foreign investment through contracts between the State and foreign investors, under which Chile guaranteed legal stability and tax invariability. This framework enabled the country to attract significant capital inflows, particularly in the mining sector. The duration of tax invariability ranged from 10 years, extendable up to 20 years. Unlike that statute, this new regulation seeks to include both local and foreign investors.
Tax experts welcome the reinstatement of such a measure to promote investment.
One of them, Javier Jaque, Lead Partner at CCL Auditores Consultores, states:
“Tax invariability was a fundamental pillar of Chile’s development in the 1980s and 1990s. Therefore, we have experience with it, and the terms used ranged from 10 to 20 years depending on the type of project. From this perspective, any regulation moving in that direction will support economic development. Depending on the scale of the projects, a differentiation in the duration of invariability could certainly be considered: mining and large-scale projects for 20 years, and smaller projects for 10 years.”
Meanwhile, Claudio Bustos, partner and attorney at Bustos Tax & Legal, notes:
“It is likely that, today, a tax invariability rule will not have the same level of attractiveness as in previous decades, mainly due to the relative political and economic stability the country has achieved.”
However, he adds:
“Such a rule may still be relevant as a competitive tax factor compared to other Latin American countries, where the same level of political and economic stability is not necessarily present.”
Vanesa Lanciotti, Lead Partner of Tax & Legal at Deloitte and economist, says:
“In a small and open economy like Chile, investment—and particularly foreign investment—is key. To attract it, strong macroeconomic fundamentals are not enough; it is essential to provide clear, stable, and credible rules over time, where tax certainty plays an important role. In this context, tax invariability can be a useful tool if it is well designed.”
The expert adds:
“The duration of such invariability should not be fixed or arbitrary, but rather depend on multiple variables, especially the sectors and types of projects that are intended to be promoted. From a financial standpoint, one of the most commonly used indicators to evaluate investments is the time it takes for a project to recover its initial investment through cash flows. This payback period varies significantly across industries and is not an absolute parameter.”