Chile enacts new law to reduce taxes for technology innovation companies
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January 15 23:13:29, 2019
Chile issued the Science and Technology Research and Development Act on March 6th, aiming to encourage private companies to carry out technological innovation through tax cuts. Before the promulgation of the new law, in order to stimulate technological innovation, the Chilean government usually implements tax cuts for companies that engage in third-party research and development institutions to carry out technological innovation. A major reform of the new law is to extend the scope of tax reduction to all enterprises that rely on their own research and development capabilities to seek technological innovation. It is expected that after the implementation of the new law, the investment cost of science and technology innovation of tax-reduction enterprises is expected to be reduced by 35%. Another reform introduced by the new law is that the government's investment in tax incentives must account for 15% of the earnings before interest and taxes, and the maximum amount of tax cuts should not exceed $400,000. After the implementation of the new law, the proportion of the investment in research and income on pre-tax income was abolished, and the maximum tax reduction limit was raised from 400,000 US dollars to 1.2 million US dollars, so that more enterprises can enjoy tax reduction.