Chile has introduced transitional tax measures through Law No. 21,811-2026 to stabilise domestic kerosene prices until 30 September 2026. The law implements a variable-rate excise tax system, allows VAT-registered businesses to recover up to 31% of fuel taxes, and provides CLP 100,000 monthly bonuses to taxi and transport operators for six months.
Chile has enacted Law No. 21,811-2026, published on 26 March 2026, introducing transitional tax measures to curb increases in domestic kerosene retail prices. Law 21,811 outlines a series of temporary government actions designed to stabilise fuel costs and provide financial relief during an international energy crisis.
The legislation suspends the ordinary price-band mechanism of Law No. 19,030 (which governs the Oil Price Stabilisation Fund, FEPP) from 26 March 2026 until 30 September 2026. This financial mechanism operates by comparing international parity prices against government-defined reference thresholds to determine when specific taxes or credits should be applied.
During this period, a new system of variable-rate excise taxes and tax credits applies to domestic kerosene:
- Tax credit: When the parity price (P) exceeds USD 924.36/m3, a tax credit is triggered to lower the retail price. The credit is calculated based on the difference between the parity price and the reference value (adjusted by the observed dollar rate and a factor of 857.58), further influenced by the available fund and expected consumption over 12 weeks.
- Variable-rate excise tax: Conversely, if the parity price is equal to or less than USD 924.36/m3, a variable tax applies. This tax is designed to refinance the FEPP.
- VAT treatment: The law explicitly states that these transitional specific taxes do not form part of the taxable base for VAT at any stage of production or sale. Furthermore, any tax credits generated under this regime are deductible from the taxable base during the first sale or importation of the fuel.
Recovery of excise fuel tax
The law also modifies the recovery of excise fuel taxes for VAT-registered taxpayers between 26 March 2026 and 30 September 2026. Eligible taxpayers can deduct up to 31% of the specific tax paid on fuels used for their business activities from their output VAT. This specific benefit is not available to small and medium-sized taxpayers operating under the Pro-Pyme tax regime.
Additional measures
Law 21,811 includes other supportive actions:
- The Minister of Finance is authorised to increase the FEPP by up to USD 60 million until December 31, 2026.
- A monthly bonus of CLP 100,000 is granted for six months starting 1 April 2026, to owners of taxis and collective transport vehicles specifically for fuel purchases. This benefit is suspended if the average monthly price of Brent crude oil falls below USD 80.
