Chile Congress finalizes tax reform after Senate backs Kast's vetoes

Chile's Congress has concluded its review of the government's sweeping economic reform package, known as the "megareforma," after the Senate backed President José Antonio Kast's veto of three measures introduced by the opposition. The final approval came Wednesday, marking the end of the bill's legislative journey.

The vetoes targeted provisions related to the financial "right to be forgotten" for debts, a prohibition on compound interest (anatocismo), and adjustments to ensure 30-day payment terms for small and medium enterprises. These measures had been incorporated by the opposition during the reform's debate and were previously approved by the Chamber of Deputies with a simple majority.

"I believe this is a very mature outcome from Congress, and I am very satisfied," stated Minister of Finance Jorge Quiroz. He had previously argued that the vetoed articles were deemed "adverse" by the Central Bank of Chile and the Financial Market Commission (CMF). Opposition figures, however, criticized the vetoes. Senator Karol Cariola of the Communist Party argued that prohibiting compound interest "recognizes that no one should be condemned for life by a debt that the financial system itself inflates without limits."

The core of the "megareforma" involves reducing the corporate tax rate from 27% to 23%. It also includes VAT exemptions for housing purchases, tax benefits for capital repatriation, and a controversial measure guaranteeing tax invariability for large investments. The government views the reform as crucial for economic reactivation, aiming to boost Chile's growth from 2.5% last year to 3.5% by the end of its term, while also reducing unemployment and balancing fiscal accounts.

However, the law's promulgation still hinges on a review by the Constitutional Court. The court is expected to rule Thursday on challenges regarding the tax invariability chapter and certain environmental regulations, which opposition lawmakers argue may be unconstitutional. Minister Quiroz expressed confidence in a positive outcome.