Chile’s Congress on Tuesday approved a sweeping reform package championed by President Jose Antonio Kast, aimed at reviving growth in the world’s largest copper producer through corporate tax cuts and incentives for investment.
Its implementation will be delayed, however, as the government plans to strike out some provisions added during the legislative debate through a veto, while other measures face a constitutional review.
“With this law, which today completes its passage through Congress, Chile begins to grow again. It is reopening its doors to investment, entrepreneurship and progress,” Finance Minister Jorge Quiroz told reporters after the vote.
“More initiatives will follow, all aimed at getting the country back on the path of progress and growth,” he added.
The so-called “mega-reform” is Kast’s flagship economic bill. He took office in March promising to revive Chile’s economy after years of sluggish growth.
Some experts have said the government could opt for a partial enactment of the bill, allowing unchallenged provisions to take effect while contested measures remain under review.
The reform — which amends 36 laws and 15 decrees — includes a gradual cut in the corporate tax rate to 23% by 2029 from 27% currently. Critics say there is no guarantee the measure will deliver the investment boost the government expects.
The package also spans a wide range of other issues, from support for areas hit by wildfires to the relocation of aquaculture concessions.
‘CREDIBILITY TEST’
Quiroz confirmed the government will seek to remove articles on a “financial right to be forgotten,” the charging of interest on interest, and changes related to 30-day payment terms for small businesses. Those moves would also require congressional review, with no clear timeline.
Meanwhile, Chile’s Constitutional Court is reviewing opposition challenges to provisions on aquaculture concessions, environmental permitting procedures — including compensation for investors — and tax stability for new investments.
The narrow margin by which the bill advanced last month raised questions about the durability of the investment rules at the heart of the reform, analysts said.
Mariano Machado of consultancy Verisk Maplecroft said the vote had turned the bill into a “credibility test” for Chile’s ability to offer long-term policy certainty.
While some measures could help attract investment, their value could be eroded by further court challenges, tax disputes or future political battles, Machado added.
“The real question is whether Chile is rebuilding regulatory certainty or creating another cycle of temporary rules,” he said.
(Reporting by Fabian Cambero;)
