Chile’s President José Antonio Kast delivered his first national address Wednesday night, outlining a sweeping “Plan de Reconstrucción Nacional” – encompassing over 40 measures – aimed at addressing the country’s economic stagnation.
Kast Seeks Swift Approval for Tax Cuts
The President’s plan seeks to boost economic growth to 4%, reduce unemployment to 6.5%, and balance the fiscal accounts. Chile’s GDP grew 2.5% in 2025, with inflation closing at 3.5%, even as the structural fiscal deficit reached 3.6% of GDP, the highest in two decades.
According to the President, lowering taxes on businesses will encourage investment, leading to “more employment, more economic and social progress.” The proposed reduction would lower the corporate tax rate from 27% to 23% by 2029, aligning Chile with the average rate among the Organization for Economic Cooperation and Development (OECD) countries.
The plan also includes a temporary exemption from VAT on the sale of new homes, the repatriation of capital from abroad with a 7% tax, and the reinstatement of a tax stability statute for long-term investments.
Streamlining Investment
President Kast highlighted that the time required to approve an environmental impact study increased by 90% in a decade, from 560 to over 1,100 days. He stated that the state must spend less than it earns and that the national debt must not continue to grow.
He emphasized that Chile’s current corporate tax rate is the highest in its history, creating a gap with the OECD that he believes hinders investment, employment, and the country’s future. The proposed plan would gradually lower the rate to 23%, while also reinstating full deductibility of corporate taxes for owners, eliminating double taxation and encouraging reinvestment of profits.
Focus on Formal Employment
The government’s initiative includes a tax credit for payroll expenses, offering benefits to companies that pay wages to vulnerable workers. This is projected to inject $1.4 billion annually into the productive sector, benefiting 235,000 SMEs – representing 86% of the credit’s beneficiaries – and protecting over 4 million workers.
The President argued that the changes would craft formal employment more attractive to employers, and that the temporary VAT exemption on housing could recover 180,000 jobs in the construction sector, the most labor-intensive in the country.
The government aims to have the entire reform approved before September in order to present its first budgets at the end of the year. President Kast stated that the project “is not an ideological agenda” but rather an opportunity for Chileans to unite and change course for future generations.
Frequently Asked Questions
What is the Plan de Reconstrucción Nacional?
It is a package of over 40 measures presented by President José Antonio Kast, aimed at addressing the country’s economic stagnation and promoting growth, employment, and fiscal balance.
What is the proposed change to the corporate tax rate?
The plan proposes a gradual reduction of the corporate tax rate from 27% to 23% by 2029, to align with the OECD average.
What other measures are included in the plan?
The plan includes a temporary exemption from VAT on new housing sales, incentives for repatriating capital, a tax credit for payroll expenses, and the reinstatement of a tax stability statute for long-term investments.
As the proposed legislation moves forward, will these measures achieve the President’s goals of economic growth and job creation?
