Three windows, three clocks: Chile's Reconstruction Law and the deadline nobody can date yet

Chile's Congress has cleared a sweeping tax bill. Three transitional windows for private wealth close within months, and none of their clocks has started. Every rule below is cited to its exact article of the approved text.

Most of the international coverage of Chile’s Reconstruction Law has focused on the headline number: corporate tax falling from 27% to 23%, phased in between 2026 and 2029. That change matters, and there will be years to plan around it. Buried in the same bill are three transitional windows that open and close within months: a 10% flat charge to disclose offshore assets, a 10% charge to clear legacy profit registers, and a 50% cut to gift tax. None of their clocks has started, because every deadline runs from a publication date that does not yet exist. That gap is the useful part.

One note on method before anything else. Every rule below is cited to its exact article of the text Congress approved on 4 August 2026, transmitted to the President by the Chamber of Deputies in communication (oficio) No. 21,440. That text is not yet the law: until it is published in the Diario Oficial its content can change, and so can its numbering. We cite the approved bill because it is the only verifiable source that exists today, and we say so expressly wherever the distinction matters.

Where the bill actually stands

Some of this is being reported as settled. It is not.

Cleared, not enacted. The approved text contains provisions classified as organic constitutional law, which triggers mandatory preventive review by Chile’s Constitutional Court. Separately, on 6 August the Court unanimously admitted three constitutional challenges filed by opposition legislators, consolidated under case 17.828-26-CPT, and set a public hearing for Wednesday 12 August and oral argument for Thursday 13 August.

Vetoes are in play. On 5 August the executive filed three partial vetoes, none of which touches the wealth provisions. They concern compound interest, a financial right to be forgotten, and a ban on payment terms beyond 30 days.

There is no law number. Any citation to a specific number today is premature. What exists is bulletin No. 18.216-05 and the approved text recorded in communication No. 21,440.

The tax authority is already drafting. On 6 August the head of the Servicio de Impuestos Internos, Jorge Trujillo, told Diario Financiero that the agency has been preparing since the content of the bill became known, and that once the law is published its implementing instructions will go out for public consultation before taking effect, covering the corporate rate cut, gift tax and the stability regime.

That last point has a practical consequence. For a period after publication, the windows will already be running while the administrative guidance is still in consultation. The approved text assumes as much: it orders the tax authority to issue the repatriation-procedure resolution and the circular interpreting the investment lock within 3 months of publication or of the article’s entry into force, as the case may be. Whoever arrives prepared will decide calmly. Whoever starts studying the question on publication day will decide against the clock, without published criteria.

Three windows, three different clocks

The most expensive mistake here is treating these as a package with one deadline. Based on the text approved on 4 August 2026:

• Legacy profit balances, FUR, STUT and excess FUT withdrawals (eleventh and twelfth transitional articles, artículos undécimo y duodécimo transitorios). The election must be made within 8 months of publication, and it is made by declaring and paying the tax simultaneously.
• 50% gift tax reduction (first transitional article, artículo primero transitorio). Runs for 1 year from the first day of the second month following publication. The deed must be executed and the return filed within that period.
• Offshore asset disclosure (third transitional article, artículo tercero transitorio). Opens on the first day of the third month following publication and runs for 12 months.

The ordering is counterintuitive. The window that starts first is also the shortest and the one that demands the most preparatory accounting work. The window with the most total time is the last to open, and those two months of delay are the only preparation period the statute expressly grants.

For a family holding company with old FUT balances, shareholders holding assets abroad and an unresolved succession plan, the three windows overlap and compete for the same advisers, the same accounting team and the same cash. Sequencing them is a decision to be made in advance, not an outcome to be discovered.

Offshore assets: 10%, or 7% with a five-year lock

The offshore window lives entirely in the third transitional article of the approved text, a long, self-contained regime whose numbered paragraphs are worth citing separately, because each answers a different question.

The regime is voluntary and time-limited. It allows taxpayers to declare assets and income held abroad by paying a flat, final 10% charge on commercial value (paragraph 8). The rate drops to 7% where the assets are repatriated and actually invested in Chile (paragraphs 8.1 and 8.2): the assets must physically enter the country within 3 years of the law’s publication, and the investment must then be held for at least 5 years from entry, in Chilean real estate, in securities covered by articles 104 or 107 of the Income Tax Law (Ley sobre Impuesto a la Renta), or in instruments whose ultimate underlying assets are located in Chile and represent at least 80% of the total invested. Declaring does not oblige anyone to bring the assets into Chile (paragraph 2): repatriation is the condition of the reduced rate, not of the regime.

The mechanics are brisk: once the declaration is filed, the tax authority issues the assessment within 5 business days and payment is due within 10 business days of its notification (paragraph 8). The effects are broad. Payment cures the tax position of what is disclosed: the taxpayer’s good faith is conclusively presumed, and the tax, civil, criminal and administrative liability arising from the prior omission is extinguished, including foreign exchange, corporate and securities law liability (paragraph 12). The declared value becomes the asset’s tax basis going forward (paragraph 7, letter e). And the authority’s power to audit the declaration lapses by operation of law 12 months after payment (paragraph 8, second subparagraph). Paragraph 14 additionally allows assets held through companies or fiduciary arrangements that are wound up to be vested directly in the taxpayer, without that vesting counting as a disposal.

The entry conditions deserve a close read, and here the record needs correcting:

• Who qualifies (paragraph 1). Taxpayers domiciled, resident, established or incorporated in Chile. Several technical summaries circulating since the bill cleared repeat an eligibility cut-off requiring domicile or incorporation before 1 January 2025, carried over from earlier versions of the bill: the approved text contains no such date for the taxpayer. The date that does exist attaches to the assets.
• What qualifies (paragraphs 3.1 and 3.2). Assets acquired before 1 January 2026 and the income they generated up to the date of the declaration, including holdings through companies, trusts, fiduciary arrangements and mandates, with the ultimate beneficial owner identified. Crypto assets are expressly included, as defined in Law No. 21,521 (Ley N° 21.521).
• What is excluded (paragraphs 3.1, 11 and 17). Assets or income sitting, at the time of declaration, in jurisdictions rated high-risk or non-cooperative by the FATF; persons convicted of, formally charged with or committed to trial for tax crimes, money laundering or terrorist financing; and anyone already served with a formal audit notice, assessment, reassessment or tax demand before 1 January 2026 in respect of the same assets (paragraph 11, letter e). Assets brought into the country may only come from jurisdictions whose anti-money-laundering rules follow the FATF standards and whose financial intelligence units belong to the Egmont Group (paragraph 17).

Two rules deserve close reading, because they change the arithmetic.

The cost of breaking the lock is disproportionate to the discount (paragraph 8.2, final subparagraph). If the investment is not maintained in Chile for five years, the taxpayer must pay back the rate differential, the three points between 7% and 10%, plus a penalty of 20% of the declared value. The penalty is calculated on the declared value, not on the differential. The saving is three points; the cost of failing to hold is twenty. On top of that, the authority keeps audit powers over the investment’s whereabouts for up to 3 years after the five-year term ends. Anyone without genuine confidence that they can carry five years of illiquidity is buying a small discount with a large exposure.

Not using the regime is not neutral (paragraph 16). For the purposes of Article 97 No. 4 of the Tax Code (Código Tributario), the fact of not having used the regime shall be treated as an aggravating circumstance when the penalty for a tax crime is imposed. The text does not say “may”: it says “shall”. This is an unusual drafting choice. An amnesty ordinarily offers; this one also warns. For a taxpayer weighing the window, abstention no longer preserves the status quo: it adds a factor to any later enforcement file. And since paragraph 15 bars any correction or supplement to the declaration once the deadline passes, the decision, whatever it is, should be documented and dated, with the reasoning behind it.

Chile has run this play before

The country has opened disclosure windows twice in recent memory, with results that were nothing alike.

According to Diario Financiero, the window created by the 2014 tax reform raised roughly US$1,500 million across 7,832 declarations at an 8% rate. The window opened in 2024, at a 12% rate, raised around US$104 million. The rate does not explain the gap.

What explains it is what taxpayers believed about the odds of being found. In 2015 automatic exchange of financial account information was still a promise. Today it is administrative routine. That shift cuts both ways: it reduces the value of concealment, and by the same logic it shrinks the population that still has something left to disclose. Much of what was disclosable has already been disclosed or already been detected. Anyone assessing this window should be honest about which group they are in.

FUR, STUT and FUT: clearing the legacy registers

The second window looks inward, and it needs a word of explanation for readers outside Chile.

Chile taxes corporate profits in two layers: a corporate-level tax and a shareholder-level tax that falls due on distribution. Before the 2014 reform, undistributed profits accumulated in a register known as the FUT, awaiting that second layer. Successive reforms left behind a set of legacy registers that still carry balances pending shareholder-level tax: the FUT itself in the form of excess withdrawals, the FUR (reinvested profits) and the STUT (accumulated taxable profits). Many Chilean family groups still carry these balances, often without a clear view of what is actually in them.

The bill clears them through two twin provisions: the eleventh transitional article for accumulated profits and the twelfth transitional article for excess withdrawals.

The eleventh allows companies that, as of the close of commercial years 2025 or 2026 as applicable, hold a positive balance in the FUR or the STUT, both defined by reference to Law No. 21,210 (Ley N° 21.210), to elect a flat 10% tax, in substitution of shareholder-level taxes, on all or part of those balances, with no right to the associated credits, which are extinguished for all legal purposes. For the STUT there is a detail that changes the arithmetic: the taxable base is the lower of the STUT balance and the balance of the RAI register at the same date (letter B). The twelfth applies the same logic to excess withdrawals from the historical FUT, defined by reference to the third transitional article of Law No. 20,780 (Ley N° 20.780), still pending imputation.

The effect is permanent. Cleared profits are released from future shareholder-level tax, are booked as fully taxed income in the REX register, and can later be distributed outside the ordinary imputation order. And in both articles the tax paid, together with the costs incurred in applying it, is not deductible in computing taxable net income.

This decision is not taken in a vacuum. It is taken against a calendar the same law is rewriting.

Article 8 No. 3 of the approved text sets the rate in article 20 of the Income Tax Law at 23%, and the sixth transitional article phases it in: 27% for commercial year 2026, 25.5% in 2027, 24% in 2028 and 23% from 2029. In parallel, article 9 restores full imputation of corporate tax against shareholder-level tax from 1 January 2027 (fifth transitional article), with a transition for the credit restitution obligation: credits accumulated through 31 December 2026 keep the current 35% restitution, credits generated during commercial years 2027 and 2028 carry 30% and 20% respectively, and from commercial year 2029 the obligation disappears.

The structural point is this: paying 10% today is not simply a comparison against the shareholder-level rate that would apply on distribution. It is a comparison against when the distribution would happen and what the imputation rules will look like at that moment. A shareholder planning to distribute in 2027 and one who will not distribute before 2030 are not looking at the same problem, even with identical balances in the same register.

There is also a practical obstacle that precedes any calculation. These balances are historical, often carried for decades through intermediate reorganisations, changes of accountant and transfers between entities. More often than anyone admits, the figure in the books will not survive documentary reconstruction. Eight months is enough time to decide, but only if the reconstruction started earlier.

A 50% gift tax cut, with hard edges

The third window fits entirely inside the first transitional article: a 50% reduction of the tax under Law No. 16,271 (Ley N° 16.271), once per donor, with an exemption from the judicial authorisation for gifts known in Chile as insinuación (article 1,401 of the Civil Code) and, for gifts to a spouse, irrevocability.

Readers from common-law jurisdictions should note that Chile has forced heirship. A donor cannot freely choose recipients: the estate reserves a portion for forced heirs (legitimarios) and a “betterment quarter” (cuarta de mejoras) for a closed class of close relatives. The window is built on those categories, which is why it does not translate into a general gifting allowance.

The conditions, each with its clause:

• Timing (second clause). Public deed executed within 1 year from the first day of the second month following publication. The recipient must file the return with the tax authority within the same period. Deeds signed within the window comply even if registrations or recordings of the transfer happen later.
• Recipients (fourth clause). Only the donor’s potential forced heirs and betterment-quarter assignees qualify, in whatever proportion the donor freely determines. Gifts to anyone else earn no reduction, unless the donor has no such assignees, a fact that must be recorded in the sworn declaration. Here the record needs correcting again: some summaries still repeat a mandatory allocation rule between forced heirs and the betterment quarter that belonged to an earlier version of the bill; in the approved text that rule does not exist and the allocation is free.
• Wealth limit (fifth and sixth clauses). The total value gifted under the regime may not exceed 50% of the donor’s total wealth, computed as assets valued under articles 46 and 46 bis of Law No. 16,271 minus substantiated liabilities. The existence of the qualifying recipients, each one’s share, and the fact that the donor retains assets worth at least twice what was gifted are evidenced by the donor’s sworn declaration, filed with the tax authority and allowed to sit inside the deed itself.
• Notarial control (eighth clause). The notary may not authorise the deed without proof that the sworn declaration was filed and the tax paid, evidenced by a tax authority certificate that is filed alongside the deed.
• Funding the tax (ninth clause). The tax may be funded through loans by public deed or notarised promissory notes from the gifted or related companies, without triggering the charge of article 21 of the Income Tax Law, provided the loans are denominated at least in Unidades de Fomento (Chile’s inflation-indexed unit of account) and mature within 10 years. Interest on borrowing taken to fund those loans is not deductible.

Two anti-avoidance rules define who this is actually for.

The benefit is not clawed back (tenth clause). For future inheritances or gifts from the same donor, the tax will be treated as having been paid at the full, unreduced amount. The reduction is a real benefit rather than a deferral.

The benefit does not enable a sale (twelfth clause). If the gifted asset is sold within 3 years of the deed, its tax basis is the lower of the donor’s basis and the basis the recipient would otherwise have under the general rules. Gifting to step up basis and selling shortly afterwards is neutralised. And the final clause adds a fact worth retaining: the tax authority may audit the value of the gifted assets and the truthfulness of the declarations for up to 3 years from payment of the tax.

The profile that emerges is specific: a donor with enough wealth to give away up to half while retaining twice that amount, a family structure already resolved in terms of forced heirs and betterment-quarter recipients, and recipients who do not need liquidity in the near term. This is not an emergency tool. It is an accelerated succession decision, and the underlying civil law questions have to be settled before the tax rate is even relevant.

Removing judicial authorisation deserves its own comment. Eliminating a court step speeds things up and also removes an external check. Consistency between the deed, the sworn wealth declaration, the recipients’ status and the tax certificate now rests entirely with whoever structures the transaction, and the authority has three years to test it. A recipient who does not qualify, or a wealth figure that does not hold up, is not a formality: it can cost the entire reduction.

The blind spot: all three are valuation exercises

This is, in our view, the least discussed feature of the package. And this time there is no need to infer it: the approved text says it.

For the offshore regime, paragraph 7 of the third transitional article sets the valuation rules one by one: securities traded on regulated markets are declared at the average price of the 6 months preceding the declaration; financial investments held in accounts or portfolios, at their institution-issued statement value as of 31 July 2026; and everything that fits neither rule, at its commercial or market value on that same date, supported by a valuation report prepared by independent auditors registered with the Comisión para el Mercado Financiero (CMF). If the taxpayer fails to substantiate the value, the tax authority may appraise it under Article 64 of the Tax Code (letter g). The declared value also becomes the asset’s future tax basis: the figure written down today fixes today’s tax and tomorrow’s taxable gain.

For gifts, the donor’s wealth is valued under articles 46 and 46 bis of Law No. 16,271, the amounts gifted and retained are evidenced by sworn declaration, and the authority has three years from payment to test both the values and the declarations.

None of those figures will be read in a vacuum. As we discussed in The tax authority shows its hand, the Servicio de Impuestos Internos will publish a common valuation methodology in October, expressly covering gifts and inheritances, transfers and corporate reorganisations. Behind it sits Article 64 of the Tax Code, rewritten by Law No. 21,713 (Ley N° 21.713) and in force since 1 November 2024, which made the reassessment power bidirectional. An inflated price is now as exposed as an understated one.

The consequence is concrete. In a gift structured under the reduction, understating reduces the tax and invites reassessment; overstating can help evidence the required wealth limit and, for exactly that reason, also invites reassessment. The right number is the defensible one rather than the convenient one, and what makes it defensible is technical support contemporaneous with the transaction.

If the methodology is published in October and the windows open in the final quarter, taxpayers will be valuing under a freshly published standard, in areas the authority has already named as enforcement priorities. That is not a setting for an improvised valuation.

What can still change

None of the figures above is final, and saying so is not boilerplate.

The text can still move. Content may change during constitutional review, enactment and publication. This analysis is based on the text approved on 4 August 2026, recorded in communication No. 21,440; every figure and deadline must be confirmed against the published version.

The numbering can move too. The articles cited here are those of the approved bill. If the Constitutional Court strikes provisions, or vetoes that suppress articles succeed, the published law may end up numbered differently. Each rule’s identity does not depend on its number, but the final citation, the one that goes into deeds and returns, can only be made against the Diario Oficial.

The Constitutional Court is engaged on two fronts. Mandatory preventive review of the organic constitutional provisions, and the three consolidated challenges in case 17.828-26-CPT, admitted unanimously, which target the tax stability regime and certain environmental provisions, with a public hearing on 12 August and oral argument on 13 August. The wealth windows are not among the challenged provisions, so their substance does not depend on that ruling. Their timing does. Until the process concludes there is no enactment and no publication, and the whole calendar moves with it.

The publication date is the only missing input, and the only one that matters for sequencing. Everything else can be prepared now.

Seven decisions that do not require the law to be published

• Build a wealth inventory mapped to all three windows. Offshore assets and income acquired before 1 January 2026, with structure and beneficial owner identified; FUR, STUT and excess FUT balances at the close of 2025 with a 2026 projection; and total wealth of the potential donor, which is the denominator of the 50% test.
• Test eligibility before testing benefit. No prior audit notice, assessment, reassessment or demand before 1 January 2026 on the same assets; none of the criminal disqualifications of paragraph 11; source jurisdiction outside the FATF lists and with a financial intelligence unit in the Egmont Group. Rate arithmetic for an ineligible taxpayer is wasted work.
• Reconstruct the legacy balances documentarily. This is the longest task and the least tolerant of haste. If the FUR or STUT cannot be supported on review, the substitute tax does not solve that problem. It makes it visible. And for the STUT, remember the base is the lower of that balance and the RAI.
• Run a five-year liquidity test before electing the 7% rate. The saving is three points. The cost of breaking the holding requirement is twenty points of declared value plus repayment of the differential, and the authority’s audit of the investment extends up to three years past the five-year term. That decision needs a projected cash flow, not an intention.
• Commission contemporaneous, documented valuations. Stated method, assumptions with identifiable sources, named technical authorship, and an archive. For unlisted offshore assets the text itself demands a report by CMF-registered independent auditors; for gifts, the valuation rules of articles 46 and 46 bis of Law No. 16,271 and a sworn declaration able to withstand three years of scrutiny.
• Settle the civil succession questions before the tax ones. Who the forced heirs and betterment-quarter recipients are, and what share each will receive, now that the approved text leaves that allocation to the donor’s free determination. Without judicial authorisation, that control sits entirely with whoever structures the transaction.
• Document the decision not to participate, where that is the decision. Because paragraph 16 of the third transitional article orders that non-use of the disclosure regime be treated as an aggravating circumstance for the penalty of Article 97 No. 4 of the Tax Code, and paragraph 15 bars later corrections, a dated, reasoned record of why is part of the file that may eventually be needed.

A window is not an opportunity. It is a date.

Transitional measures have a poor reputation among tax practitioners, and partly deservedly so. They reward those who stayed outside the rule and they sit awkwardly with the equity of the system. They also do something worth acknowledging without irony. They resolve inherited situations the system cannot clear through ordinary channels, and they put an end date on uncertainty that would otherwise be carried across generations.

The difficulty is that their value decays with the time available. A twelve-month window used from month one is a decision. The same window opened in month ten is a race, with fewer alternatives and worse documents. And this deadline has a particular feature: it starts on an event nobody can date in advance, and which may arrive any day once the Constitutional Court clears the way.

That is why the useful work is the work done now, while the clock has not started. When the final text is published we will return to it in a second piece: exactly what survived in each transitional provision, how the final numbering settled, and what the tax authority’s first instructions said.

This article is general information and does not constitute legal advice on any specific matter. It is based on the text approved by the Chilean Congress as of 4 August 2026, recorded in communication No. 21,440 of the Chamber of Deputies. The law has not been published in the Diario Oficial and its final content and numbering may change during constitutional review, enactment and publication. Every figure, deadline and requirement should be verified against the published text before any decision is taken. If you or your family group hold assets outside Chile, legacy FUR, STUT or FUT balances pending tax, or an unresolved succession plan, get in touch to review what should be settled before the law is published.