Chile Brings Back Tax Stability Agreements: What Investors Get for USD 50 Million
Article 29 of the Reconstruction Law recreates the contract-with-the-State model that disappeared with DL 600: a 10-to-20-year freeze of the tax rules applicable to large investments, signed with the Ministry of Finance, at the price of a 1.5-point surcharge and real transparency obligations.
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Investments of USD 50 million or more in qualifying sectors can sign a contract with the Chilean State freezing their total effective income-tax burden, and more, for 10, 15 or 20 years depending on size. The price is a 1.5-point surcharge on the corporate rate. It is the first regime of its kind since DL 600 closed in 2016.
The contract and who can sign it
This is a contract with the State, not a unilateral benefit, and that legal form is the point.
The Ministry of Finance signs on behalf of the State, after a report from InvestChile (the foreign investment promotion agency), which acts as the investor's channel and platform. Eligible are foreign investors as defined by Article 3 of Law 20.848, Chile's FDI framework, investing at least USD 50 million in projects in mining, industry, forestry, energy, infrastructure, telecommunications, research and technology, or medical and scientific development. Chilean-domiciled investors can access the same regime on the same conditions, excluding their personal taxes. Signing the contract does not approve the project itself: permits, environmental review and sector regulation follow the ordinary rules.
Investment counts both capital and debt actually deployed in the project, with one hard limit: related-party debt may not exceed three times the company's tax equity, or the stability is lost.
Terms: 10, 15 or 20 years from start-up
The term scales with investment size and runs from the year the project first books core-business revenue, not from signing.
| Investment | Stability term |
|---|---|
| USD 50M to under 100M | 10 years |
| USD 100M to under 350M | 15 years |
| USD 350M or more | 20 years |
What the contract freezes
The reference line is the rate, base and elements of the taxes in force on the contract date.
- The total effective income-tax burden on the covered investment, equivalent to the rules in force at the contract date.
- VAT and customs treatment of capital-goods imports, frozen for as long as the committed investment takes to deploy.
- The tax agency's interpretations in force at signing on depreciation, loss carryforward and start-up expenses, plus authorization to keep books in foreign currency where granted.
- For export projects, the legal rules on the right to export freely.
- For mining: the mining royalty of Law 21.591 as it stands at signing, immunity from new mining-specific taxes or charges, and the mining patents regime.
The freeze is not a shield against everything: Chile's general anti-avoidance rules apply in full, and stability cannot be used to reduce taxation through structures lacking economic substance.
The price and the strings attached
Stability is bought, and the obligations are designed to be audited.
- A surcharge of 1.5 percentage points on the first-category (corporate) tax rate fixed in the contract.
- Audited annual financial statements, filed quarterly and annually with the CMF together with an ownership report; missing the filings forfeits the regime for the company and all its investors.
- Separate tax accounting for the covered project, with profit allocation agreed with the Ministry of Finance at signing.
- Disclosure at application of estimated employment impact, local supply-chain linkages and, where relevant, a territorial engagement plan; corporate reorganizations must be reported.
- One-time exit: the investor may waive the regime once, definitively, and join the common rules. Stability is lost on a final conviction for tax crime or on general anti-avoidance findings.
Disputes: mediation, then arbitration
The dispute clause is part of what makes the contract credible to a foreign board.
Disputes over the interpretation, application, validity or termination of the contract go first to mediation before InvestChile, with the relevant State agency appearing as a party. If mediation fails, the investor may demand arbitration, whose terms the contract must define. The carve-out matters: arbitration does not reach the tax agency's statutory audit, interpretation and assessment powers, which remain with the ordinary courts; while an arbitration runs, the related statute-of-limitations periods are suspended.
What the Constitutional Court changed
The regime survived its constitutional challenge in the core, with a narrower perimeter.
On August 13, 2026 the Court resolved the opposition challenges, upholding the stability contracts themselves. Per the announced ruling, it struck the open-ended clause in the sector list, the Finance Ministry's power to extend the capital-deployment deadline in qualified circumstances, and the extension of stability to related projects. The written ruling and the text published in the Official Gazette will fix the exact perimeter; until then, planning should rest on the core regime described here and treat the struck extensions as gone.
Timing: the freeze meets the rate cut
The same law cuts the corporate rate, and the interaction rewards modeling before signing.
The freeze references the rules in force on the contract date, and the Reconstruction Law itself lowers the corporate rate gradually from 27% toward 23% between 2027 and 2029 (see the rate schedule). Signing early buys certainty at a higher reference rate; waiting locks the lower rate but leaves the interim exposed. For most projects the driver is the start-up date, since the 10-to-20-year clock runs from first core revenue. This analysis belongs inside the broader entry structure: entity form, financing mix against the 3:1 related-debt cap, and the ordinary tax treatment of a foreign company in Chile as the baseline the contract is measured against.
Frequently asked questions
Is this DL 600 coming back?
In substance, yes: it is the first general tax-stability contract regime since Chile closed DL 600 to new contracts in 2016. Article 29 of the Reconstruction Law recreates the contract-with-the-State model, signed by the Ministry of Finance, with longer terms (10 to 20 years versus DL 600 practice) and a broader freeze, in exchange for a 1.5-point surcharge on the corporate tax rate.
Who qualifies and from when?
Foreign investors under Article 3 of Law 20.848 investing at least USD 50 million in qualifying sectors, and Chilean-domiciled investors under the same conditions (excluding their personal global complementario tax). The regime exists from January 1, 2027, or from the law's entry into force if later, and several Finance Ministry regulations must issue within six months of publication.
What exactly is frozen?
The total effective income-tax burden on the covered investment, at the rules in force on the contract date; VAT and customs treatment of capital-goods imports during the investment period; the tax agency's interpretations on depreciation, loss carryforward and start-up expenses; and, for mining projects, the mining royalty, mining patents and any new mining-specific taxes. General anti-avoidance rules still apply.
What does stability cost?
A surcharge of 1.5 percentage points on the first-category (corporate) tax rate fixed in the contract, plus real obligations: audited financial statements filed with the CMF, separate tax accounting for the covered project, disclosure of employment and supply-chain impact, and reporting of corporate reorganizations. Stability is lost on a final tax-crime conviction or general anti-avoidance findings.
How does the timing interact with the corporate tax cut?
The freeze takes the rules in force on the contract date, and the same law cuts the corporate rate gradually from 27% toward 23%. A contract signed early locks a higher reference rate than one signed after the cut phases in. For a project with a long ramp-up, modeling the signing date against the rate schedule is part of the decision, not an afterthought.
What happens if a dispute arises with the State?
The contract must channel disputes to mediation before InvestChile (the foreign investment promotion agency) and, if mediation fails, to arbitration. Arbitration covers the interpretation, application, validity and termination of the contract; it does not reach the tax agency's statutory audit and assessment powers, which stay with the ordinary courts.
Official sources
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