After Paraguay, another South American country cuts corporate taxes, reduces the rate from 27% to 23%, and launches a package with over 40 measures to attract investments, generate jobs, and differentiate itself from Brazil in the dispute for competitiveness.

Written by Fabio Lucas Carvalho

Published on 23/04/2026 at 01:05

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After Paraguay gained ground with a lighter tax policy, another South American country presented a reform with tax cuts for companies, incentives for capital repatriation, temporary VAT exemption, and a goal to boost growth, reduce unemployment, and attract investments

Chile took a central step in José Antonio Kast’s government economic agenda this Wednesday (22) with the signing of a mega-reform aimed at cutting taxes and stimulating growth. The president announced that he would send the bill to Parliament on the same day, presenting the proposal as the main plan of his administration.

During a ceremony at La Moneda Palace, Kast stated that the initiative is more relevant for the country’s future than for the government itself. He said that, if approved, the measure could mark a before and after for Chile, as part of a strategy to reactivate the economy and increase the participation of the private sector and entrepreneurs.

Project targets growth, employment, and fiscal balance

Named the Economic and Social Reconstruction and Development Bill, the proposal brings together more than 40 measures. Among the objectives defined by the government are to raise Chile’s growth to 4% by the end of the mandate, reduce the unemployment rate to 6.5%, and balance fiscal accounts.

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Tax cuts and investment incentives

The central axis of the proposal is the reduction of taxes for companies, with the rate falling from 27% to 23%. The package also includes tax benefits for the repatriation of capital held abroad and incentives aimed at generating formal employment.

Another planned measure is the temporary VAT exemption on the sale of new properties. The project also includes actions to streamline environmental licenses, in an attempt to unlock investments and accelerate economic activity.

Kast stated that the country reached this point because many believed that the State, by itself, could generate wealth. In the president’s speech, without the complement of the private sector or entrepreneurs, this would be practically impossible.

Taxes enter regional dispute for competitiveness

The Chilean proposal emerges amidst a regional dispute for competitiveness and attracting companies. After Paraguay gained ground in Latin America with an aggressive policy aimed at investors, Chile is trying to move in a similar direction with corporate tax reductions and increased incentives.

In the Paraguayan case, the differential cited in the regional debate involves the maquila regime with a 1% rate on the final exported value, suspension of import taxes for machinery and inputs, VAT credit, and exemptions related to the remittance of profits. The country also operates with a 10% corporate tax and 10% VAT, within a lighter tax structure.

Opposition resistance threatens processing

Despite the government’s defense, the reform faces resistance in the Chilean Congress. The center and left opposition has already announced that it will vote against it and accuses Kast of pushing a disguised tax reform.

Critics claim that the proposal favors the wealthiest and could significantly reduce tax revenue. Thus, the project that bets on tax cuts to re-stimulate the economy arrives in Parliament surrounded by political deadlock and strong opposition.

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After Paraguay, another South American country cuts corporate taxes, reduces the rate from 27% to 23%, and launches a package with over 40 measures to attract investments, generate jobs, and differentiate itself from Brazil in the dispute for competitiveness.

After Paraguay gained ground with a lighter tax policy, another South American country presented a reform with tax cuts for companies, incentives for capital repatriation, temporary VAT exemption, and a goal to boost growth, reduce unemployment, and attract investments

Project targets growth, employment, and fiscal balance

Tax cuts and investment incentives

Taxes enter regional dispute for competitiveness

Opposition resistance threatens processing

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After Paraguay, another South American country cuts corporate taxes, reduces the rate from 27% to 23%, and launches a package with over 40 measures to attract investments, generate jobs, and differentiate itself from Brazil in the dispute for competitiveness.

After Paraguay gained ground with a lighter tax policy, another South American country presented a reform with tax cuts for companies, incentives for capital repatriation, temporary VAT exemption, and a goal to boost growth, reduce unemployment, and attract investments

Project targets growth, employment, and fiscal balance

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Opposition resistance threatens processing

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