Chilean President Jose Antonio Kast has formally filed the Economic and Social Reconstruction and Development Bill in the Chamber of Deputies, a 40-plus measure package including a staged reduction in corporate tax from 27% to 23% aimed at reviving growth and cutting unemployment, El Mercurio reported on April 23.

The bill, presented to Congress on April 22, outlines a phased reduction in the corporate tax rate known as Primera Categoria, falling from 27% to 25.5% in 2027, to 24% in 2028 and to 23% from 2029 onwards. The rate for small and medium enterprises would fall from 25% to 23% from 2030.

The package includes a $1.4bn annual tax credit scheme to support formal employment, expected to benefit around 235,000 SMEs covering 4mn workers. The measure is designed to incentivise hiring while strengthening the formal labour market.

Kast also proposes reinstating the fully integrated tax system that was in place until 2014 before former President Gabriel Boric's reforms replaced it with a semi-integrated model. Reinstatement would eliminate double taxation on corporate profits distributed to shareholders.

Other measures include tax incentives for capital repatriation, a temporary VAT exemption on new home sales, reconstruction support for more than 1,000 homes destroyed by wildfires and steps to reduce regulatory bottlenecks for medium and large investments, where approval timelines currently exceed 1,000 days.

Kast framed the reform in terms of three macroeconomic targets to be met by the end of his term in 2030: annual GDP growth of approximately 4%, unemployment at 6.5% against the roughly 8.5% of 2025, and fiscal accounts in structural balance.

"We did not come here to repeat the previous cycle; we came to break it," Kast said in his first televised address since taking office on March 11.

Chile grew 2.5% in 2025 and the World Bank projects 2.2% for 2026, restrained by copper price volatility, US trade tensions and elevated construction-sector unemployment. The 4% target is a pace Chile has not sustained since the commodity supercycle of the early 2010s.

The government argues that the corporate tax cut would benefit 150,000 companies that employ more than 50% of Chile's formal labour market and concentrate 90% of national investment, according to Baker McKenzie's February analysis cited by the administration.

The left-wing opposition has rejected the package. Gael Yeomans, a Frente Amplio lawmaker, said on X that "a government of millionaires presents a tax reform for billionaires," according to La Tercera. The opposition has accused Kast of pushing through a disguised tax reform that would benefit the wealthiest and significantly reduce tax revenue.

Inflation fell to 2.4% year on year in February, the first sub-3% reading since early 2021, allowing the Central Bank of Chile to hold its rate at 4.50% after 675 basis points of cumulative cuts. The IPSA stock index hit an all-time high of 11,721 on Kast's inauguration.

More than 800,000 people are estimated to be seeking work in Chile, with youth unemployment accounting for roughly 22% of those without jobs. Over 100,000 people are living in informal settlements.

The bill now heads to Congress where Kast's coalition lacks the votes to pass it unaided, with the government dependent on support from libertarian and populist parties including the People's Party (PDG).