As the title above states, Chile is optimistic when it comes to the development of renewable energies. According to a report published by the Chilean Association of Renewable Energy and Supply, in October 2019 NCRE reached 5,828 megawatts (MW) of installed capacity, constituting 23% of all the electricity generated in the country.
The general legal framework for Chile’s energy sector is defined by the Non-Conventional Renewable Energy Law, approved in 2008; an important time in the history of renewable energies in Chile. The main function of the law was designed as Chile’s main mechanism in order to encourage the development of renewable energy investments, and provide a standard to achieve.
The Chilean government has published a series of national policy documents describing its vision for energy, which started in 2012. The National Energy Strategy 2012-2030 was followed by the Energy Agenda 2014-18 (published in May 2014), a document entitled “Energy 2050” (published in December 2015) and Energy Roadmap 2018-22 (published in May 2018).
In Chile, Laws 20.365 and 20.897 are currently in force, which provide special tax exemptions for solar thermal systems. These are just some of the remaining operational tax advantages:
The income tax rate is 27% of the taxable base.
There is a benefit of accelerated depreciation until 2025.
With regard to the PPM tax (advance to companies), the amount of the investment in the fixed assets of the business can be reduced.
Companies can ask for the return of CF-VAT for the construction or purchase of their independent renewable energy systems which are not yet in operation.
Regarding customs taxes, at the moment there is nothing specific for the sector, so the general rules apply; that is, Ad valorem tax (which does not apply if Chile has a free trade agreement with the country that imports its goods).
It is important to point out additional benefits not directly addressed to the sector, but which could be considered applicable, due to the type of investment required; such as The Tax Incentive Law for Research and Development, which allows companies a first class tax reduction, equivalent to 35% of the accepted and certified expenditure for this concept. (The rest of the amount invested in Research and Development activities are accepted as a necessary expense for the generation of income.)
Latin America: at the gates of leadership in renewable energies
We reviewed the legal framework as well as the tax benefits of the main Latin American countries. Download our complete White Paper in pdf here:
In Auxadi we are experts in providing value added services in accounting, finance, tax compliance, payroll management and technology, being a strategic partner of your business. If you need to expand on what we have stated here, please do not hesitate to contact us.
Manuel Oportus Vilches
Country Manager Auxadi Chile
All information contained in this publication is up to date on 2021. This content has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this content, and, to the extent permitted by law, AUXADI does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.