Chile Congress advances Kast's economic overhaul toward law

Chile’s Congress moved President José Antonio Kast’s economic overhaul closer to law on Tuesday, approving nearly all of the remaining changes to a package built to reshape taxes, investment rules and public financing. The legislation would gradually cut the corporate tax rate from 27% to 23% and alter the foreign investment regime, making it one of the most consequential economic shifts in Latin America’s pro-business policy debate.

Kast, who took office on March 10 amid an economic upswing, first unveiled a broad set of reforms on April 16 that included the corporate tax cut. His government formally sent the National Reconstruction Bill to Congress on April 22, presenting it as more than 40 measures meant to reactivate the economy, promote investment and strengthen funding for priority public policies. The 203-page package was also structured around four pillars, physical reconstruction, economic reactivation, institutional modernization and fiscal responsibility.

The political bargain behind the bill showed how narrow the coalition around it has been. Finance Minister Jorge Quiroz withdrew a surprise proposal to take the corporate rate down to 22% and kept it at 23% after pushback from three senators from the centrist PPD. That retreat helped keep the overhaul moving, but it also exposed the limits of Kast’s mandate and the pressure required to keep the package intact.

Critics have framed the measure as a transfer of power toward companies and wealthy households. Opposition lawmakers said the government was favoring the wealthiest citizens while failing to support families and small businesses. KPMG said the draft reconstruction bill also proposed changes to investment, housing and wealth taxes, while other tax advisers said the plan was designed to give investors more legal certainty and make Chile more attractive to foreign capital.

The stakes are high in a country that is both a major copper producer and a key destination for mining, infrastructure and energy investment. A lower corporate tax rate and long-term investor guarantees could help shape hiring, capital flows and business planning, but they could also tighten the room for spending on social programs, pensions, education and public health if lawmakers do not clearly replace the revenue elsewhere. Supporters argue the reform will spur growth and create jobs; opponents see a risk that the benefits will concentrate at the top while communities absorb the cost.

For Kast, the congressional advance is a tangible policy win, but the route to enactment has already required concessions that underscore how politically fragile the overhaul remains. How Chile resolves that balance will matter well beyond Santiago, where other governments across Latin America are watching whether a rightward economic turn can hold together once the tax bill arrives.