The Finance Minister, Felipe Larraín, announced on August 23, 2018, that the draft law for the modernization of taxation was submitted to Congress. It includes modification in the tax system to inspire growth, entrepreneurship, investment, savings, and employment and also give benefits, especially for small and medium-sized enterprises (SMEs) and entrepreneurs. The key points of this proposal are given below:

  • A single fully combined tax regime would be announced.
  • A special regime would be available for SMEs. Also, the corporate income tax rate for these companies would be reduced to 25%.
  • The general anti-avoidance rules would be strengthened and clarified.
  • A new definition of permanent establishment under domestic law, which mostly follows OECD guidelines.
  • A corporate tax benefit would be extended from 2025 to 2035. But, these incentives are available for some specific provinces.
  • International tax rules system would be updated and simplified.
  • Taxpayers would be allowed to expense 50% of their investment in capital assets during a two-year time period.