Climate change tax reforms and incentives in Chile

1. Has your country ratified the Paris Agreement? 

Yes.

2. Has your country introduced environmental taxes?

2.1 Energy taxes

Oil tax: applies to the consumption of automotive gasoline, diesel oil, liquefied petroleum gas for vehicle consumption and compressed natural gas for vehicle consumption.

2.2 Transport Taxes

Green Tax: a one-time tax on new cars, light and medium, depending on their urban performance. 

2.3 Pollution taxes

Annual Tax on air emissions (please see below)

2.4 Resources taxes

N/A

3. Has your country introduced a carbon tax?

There is an annual tax on air emissions of particle matter (PM), nitrogen oxide (NO), sulphur dioxide (SO2) and carbon dioxide (CO2), produced by establishments whose emission sources emit 100 or more tons of PM or 25,000 or more tons of CO2 per year.

4. Does your country offer sustainability incentives (tax credits, subsidies or other business incentives) to encourage taxpayers to engage in behaviours and develop technologies that can impact positively the environment? 

The new tax law – published on 24 February 2020 – expressly provides for the deduction of expenses or disbursements incurred for compliance with environmental requirements in the development of projects or activities. The new rule allows the deduction from gross income of those expenses or disbursements incurred due to environmental requirements, measures or conditions imposed for the execution of a project or activity (including expenses incurred in connection with environmental commitments and disbursements made for the benefit of the community). The expenses must be included in a contract or agreement signed with a government agency. The ceilings are 2% of the net taxable income of the respective year, 1.6 per thousand of the company's tax equity or 5% of the total annual investment made in the execution of the project. This excess will not be accepted as an expense.

5. Has your country recently announced tax reforms connected to climate change? 

Yes, the new tax law was published on 24 February 2020 and incorporates the above.

6. Other comments

N/A

Diego García Lawyer CMS Law
Diego Garcia, LL.M.
Partner
Santiago