Removes existing tax incentive for companies operating in the construction industry
04 Feb 2022
On 4 February 2022, the Chilean Government enacted Law 21.420, which introduces reforms to the Income Tax Law (Law No. 824, Ley sobre Impuesto a la Renta).
Among the reformed provisions, the Sixth Transitory article eliminates an existing tax credit for companies operating in the construction sector. Until before the reform, construction companies could benefit from a special tax deduction to up to 65% of their TVA debit for the sale of real estate assets up to a certain cost threshold (approximately US$ 77,000).
The amended version of the law eliminates this tax credit for all real estate construction contracts as of 2025, while reducing by half the percentage of deductible TVA expenses (32.5%) for contracts signed as of 2023 and whose execution begins before January 1, 2025.
Nature of measure:
Type:
-
Promotion and facilitation (Investment incentives)
Industry:
Inward FDI:
No
Outward FDI:
No
Sources:
