Chile’s proposed capital market reform would expand capital gains exemptions, remove withholding and registration barriers for foreign investors, and introduce VAT and stamp tax relief for selected financial services and securities.
The Chilean parliament is considering the draft Law on the Reform of the Capital Market and Access to Home Ownership (Ley de Reforma al Mercado de Capitales y Acceso a la Casa Propia), which was submitted on 9 September 2026.
This draft legislation introduces a sweeping set of tax and regulatory modernisations designed to restore financial market depth, reduce borrowing costs, and position Chile as a regional financial hub. This legislation introduces a comprehensive bill to reform capital markets and improve housing finance. The proposal outlines the historical development of the Chilean financial system while diagnosing a recent decline in liquidity and depth caused by pension fund withdrawals and outdated regulations.
Expansion of the capital gains tax exemption
The bill proposes a broader and more flexible capital gains tax exemption for securities traded in Chile. It would replace the existing 25% adjusted presencia bursátil requirement with a 15% minimum free float, making the test more accessible to listed companies.
The exemption would also be expanded beyond open stock corporations to cover closed stock corporations and SpAs, while shares of startups, growth companies, and greenfield mining exploration companies listed on the new Junior Segment would also qualify.
Certain quotas of public investment funds and mutual funds would be eligible, subject to specific trading and portfolio requirements.
The proposed rules would further extend the exemption to foreign publicly offered securities registered and traded locally, qualifying exchange-traded derivatives, and endorsable mortgage loans traded on commodity exchanges, significantly widening the range of assets that may benefit from the preferential capital gains treatment.
Tax-deferred reinvestments in public investment funds
Currently, Article 108 allows investors to defer capital gains tax on the sale of non-exempt mutual fund quotas when the proceeds are reinvested in other mutual funds.
The reform would extend this tax-deferred reinvestment mechanism to public investment funds, helping remove tax differences between collective investment vehicles.
The measure is intended to facilitate longer-term financing for venture capital, small and medium-sized enterprises (SMEs), and invoice-factoring funds.
Elimination of the 4% withholding tax on interest paid to non-residents
The reform would simplify the tax treatment of interest paid to non-resident investors on qualifying publicly offered Chilean debt instruments. It would clarify that such interest is not Chilean-source income and abolish the existing 4% withholding tax under Articles 59 and 74 of the LIR.
This would eliminate tax-refund procedures for foreign institutional investors and potentially reduce issuance costs, while domestic investors would continue to pay income tax on a received basis (base percibida) without withholding.
Removal of holding period and fiscal interest rate requirements
The reform would simplify the capital gains exemption for publicly offered debt instruments by removing the mandatory 12-month holding period and replacing the rigid Fiscal Interest Rate (Tasa de Interés Fiscal — TIF) requirement with a market-based coupon that is paid at least annually. These changes are intended to improve fixed-income market liquidity and facilitate the international trading of Chilean corporate and sovereign bonds through major global clearing and trading platforms.
Chilean taxpayer ID (RUT) exemption for foreign non-resident investors
The reform amends Article 66 of the Tax Code to exempt certain non-resident foreign investors from obtaining a Chilean Taxpayer ID (RUT) or filing start-of-activity notices when investing exclusively in eligible debt or equity securities. Since local issuers, brokers, and custodians already handle the required tax withholding, the RUT requirement is removed to reduce entry barriers and facilitate foreign investment.
VAT exemption for exported financial services
The reform amends Article 12(E)(16) of the VAT Law to clarify that financial advisory, investment management, consulting, and wealth management services provided to non-residents are deemed to be used abroad and therefore qualify for the 19% VAT exemption, regardless of where the underlying assets are located. This removes previous tax restrictions and improves the competitiveness of Chilean asset managers serving international clients.
Expansion of stamp tax exemptions for foreign capital
The reform expands Stamp Tax Law exemptions to non-residents for capital raises, deposits, and credit transactions, creating equal tax treatment for foreign and domestic investors. It removes the previous disadvantage on cross-border lending and foreign bank financing, helping reduce funding costs.
New stamp tax exemption for debt securities on the “junior segment”
The reform introduces a full stamp tax exemption for certain publicly offered bonds and debt instruments issued for trading on designated exchange markets for emerging and expanding companies. This reduces debt issuance costs for early-stage businesses and junior mining firms.
