Chile's Kast Unveils 40-Point Economic Reform Package to Boost Growth

Chilean President Jose Antonio Kast introduced a sweeping economic reform package this week, outlining 40 measures aimed at reinvigorating the country's economy and stabilizing employment. Addressing the nation for the first time since assuming office last month, Kast emphasized that the reforms are a practical response to pressing economic challenges rather than a politically driven agenda.

The reform package is built around five core objectives: enhancing tax competitiveness, reinforcing formal employment, cutting through regulatory red tape, strengthening legal certainty for investors, and maintaining disciplined public spending. At the heart of the proposal is a gradual reduction in the corporate tax rate from 27% to 23% over four years — a move Kast's administration believes will position Chile as a more attractive destination for business and investment.

Among the standout measures is a new tax credit linked to wage payments, designed to incentivize smaller businesses to bring workers into the formal economy. Kast stated the initiative would inject approximately $1.4 billion annually into the productive sector, benefiting around 235,000 small and medium-sized enterprises and protecting over four million workers. Additional reforms include faster processing of environmental permits for major projects like mining operations, a temporary VAT exemption on new home sales, roughly $450 million earmarked for regions affected by recent wildfires, and a property tax exemption for homeowners aged 65 and older on their primary residences.

Kast has set an ambitious target of lifting Chile's annual economic growth from 2.5% to around 4%, though many analysts remain doubtful about the feasibility of that goal. His path forward in Congress also presents a significant challenge, as right-wing allied blocs fall short of a majority in both legislative chambers. Opposition members have already questioned the tangible impact of certain proposals, particularly the corporate tax reductions, signaling that legislative negotiations could be lengthy and contentious.