Advisory on the substitute 10% tax on accumulated profits under the Chilean Reconstruction Law by Anguita Osorio.
Quantification of FUR and STUT balances and partner-by-partner modeling of the election.
Substitute 10% Tax: the Window for Accumulated Profits
The Reconstruction Law lets companies pay a single 10% tax on profits accumulated under prior regimes, replacing the personal taxes their withdrawal would trigger. The window runs for 8 months from publication of the law. It is aimed at companies carrying FUR or STUT balances or excess withdrawals, measured at the close of 2025 or 2026.
This page covers the substitute tax in four moves: what the regime is and who it serves, the trade-off behind the 10% and when it tends to pay off, why waiting does not improve the historical stock, and how the election is exercised and what to prepare now. It closes with frequently asked questions and the official sources.
What it is and who it serves
A single 10% that replaces the personal taxes on withdrawal.
Companies holding taxable profits accumulated under prior regimes (FUR, STUT or excess withdrawals, at the close of 2025 or 2026) may pay a single 10% tax on all or part of those balances. The payment replaces the personal taxes the owners would face on withdrawal. Whatever is brought into the regime is released: it can be withdrawn later without following the ordering rules and without withholding.
Eligible balances
Profits accumulated under prior regimes: FUR, STUT or excess withdrawals. The reference balances are those at the close of 2025 or 2026, and the company chooses how much of them to bring in.
What the 10% replaces
The personal taxes that the withdrawal of those profits would otherwise trigger for the owners. The company settles the burden once, at the entity level, at a flat 10%.
Effect of the election
The elected profits are released. They can be distributed at any later date without the ordering rules that govern imputation and without withholding on the withdrawal.
The flat rate looks attractive on its face, but the regime has a price that defines the whole decision.
The trade-off: the credits are lost
The 10% is paid in exchange for forfeiting the credits attached to the balances.
Electing the regime means giving up the tax credits attached to the profits brought in. For STUT balances there is an additional cap: the eligible base is the lower of that balance and the accumulated taxable profits. The comparison that matters is therefore not 10% against zero, but 10% against the effective rate each owner would pay on an ordinary withdrawal after applying the credit being sacrificed.
When it tends to pay off
When the owner’s personal rate sits well above 10%, so the flat rate captures a real saving on the withdrawal, and when the credit attached to the balances is low or partial, so the forfeiture costs little.
It also gains value when the owners want the freedom to withdraw released profits later without imputation ordering or withholding.
When it tends not to
When the credit attached to the balances is high, because the 10% is paid on top of forfeiting a credit that would have absorbed much of the personal tax, or when the owner’s personal rate is close to or below 10%.
In mixed ownership structures the answer can differ partner by partner, which is why the modeling must run at that level.
A natural objection is to wait for the reform’s better credits. For the historical stock, that bet does not work.
Why waiting does not help
The reform improves future profits, not the accumulated stock.
The credits attached to the historical stock keep today’s rules even if the withdrawal happens years from now, and the law requires those old profits to be consumed first. Waiting improves nothing for balances accumulated through the close of 2026. What does improve is the treatment of new profits, which earn the full credit assigned by year of generation: 70% for 2027, 80% for 2028 and 100% from 2029.
- The stock keeps its current credits: time does not upgrade them, no matter when the withdrawal occurs.
- The law orders old profits to be consumed first, so the stock cannot be parked behind the new, better-credited profits.
- The improved credits apply only to profits generated from 2027 onward. For the stock, the tool the law offers is precisely this 10% substitute tax.
How the corporate rate falls and how the full owner credit phases in is covered in the page on the corporate tax cut and the 2027-2029 schedule.
How the election works and what to prepare now
A filing and payment within 8 months from publication, with homework that can start today.
The regime is exercised by filing a return and paying the 10% within 8 months from publication of the law. The window is short for a decision that depends on numbers most companies have never consolidated, so the preparation should not wait for the Official Gazette.
- Quantify the historical balances
Consolidate FUR and STUT balances and excess withdrawals, identify the credits attached to each and, for STUT, compute the cap set by the accumulated taxable profits.
- Model the election partner by partner
Compare the 10% against an ordinary withdrawal for each owner’s tax position, net of the credit that would be forfeited, and decide whether to elect all, part or none of the balances.
- File and pay within the window
Once the law is published, execute the election with the return and the payment of the 10% within the 8-month window, over the amount the modeling supported.
Balances to quantify and a decision to model?
We quantify FUR and STUT balances, model the 10% against an ordinary withdrawal for each partner and prepare the election so the 8-month window is spent deciding, not reconstructing records.
Tax compliance advisoryFrequently asked questions
The questions that come up most often about the regime.
My company has old accumulated FUT balances. What can I do under this law?
The Reconstruction Law opens an 8-month window from publication to pay a single 10% tax on those historical balances (FUR, STUT or excess withdrawals) and leave them released for withdrawal. It pays off when 10% beats the burden of withdrawing through the ordinary route, which depends on each owner's personal rate and the credits sacrificed: the decision requires modeling the numbers before the clock starts.
Which profits qualify for the substitute tax?
Balances of taxable profits accumulated under prior regimes: FUR, STUT or excess withdrawals, measured at the close of 2025 or 2026. The company may elect the regime for all or only part of those balances. For STUT, the eligible base is the lower of that balance and the accumulated taxable profits.
How long is the window and when does it open?
The window runs for 8 months from publication of the law in the Official Gazette. The law has not yet been published and the exact date is uncertain, so the clock has not started. The regime is exercised by filing a return and paying the 10% tax within that period.
What is given up by electing the regime?
The tax credits attached to the profits brought into the regime. That is the cost: the single 10% replaces the personal taxes on withdrawal, but the company forfeits the credit those profits carried. The decision therefore requires comparing the 10% against the effective rate each partner would pay on an ordinary withdrawal, net of the credit.
Is the 10% always the better option?
No. It tends to pay off when the owner’s personal rate comfortably exceeds 10% and the credit attached to the balances is low or partial. It tends not to pay off when the sacrificed credit is high or when the partner’s personal rate is close to or below 10%. The answer depends on each partner’s position and must be modeled case by case.
What happens if I do nothing?
Historical balances remain under the current rules: the credits attached to the stock do not improve over time, even if the withdrawal happens years later, and the law requires those old profits to be consumed first. The credit improvement the reform introduces (70%, 80% and 100%) applies only to profits generated from 2027 onward, not to the accumulated stock. If the window closes without an election, the benefit is lost.
Official sources
- Legislative file, Bulletin 18.216-05 (Senate of Chile)
- Text approved by Congress: Chamber of Deputies official communications No. 21.252 and No. 21.412, and Senate official communication No. 245/SEC/26.
Informational content, updated as of July 2026. It does not constitute legal advice for a specific case.
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