President José Antonio Kast and his cabinet confirmed on Thursday an agreement with business sector representatives to ensure that the first-category tax rate for SMEs remains fixed at 12.5% permanently. The decision followed a meeting at La Moneda attended by Finance Minister Jorge Quiroz, Interior Minister Claudio Alvarado, Economy Minister Daniel Mas, and Government Spokesperson Mara Sedini.
This commitment aims to eliminate the tax uncertainty facing the sector due to proposed changes in the current major tax reform. According to tax records, the first-category tax for these companies was temporarily reduced from 25% to 10% during the pandemic (2020-2022), before rising to 12.5% in 2023.
The original plan proposed that the rate would increase to 15% in 2029 and return to the general regime of 23% in 2030, subject to the approval of the current tax reform. However, the Government announced it will submit an independent bill to keep the tax at 12.5% permanently, which will also include other measures designed to benefit this group.
Following the meeting, Interior Minister Claudio Alvarado noted that “the issue of very small businesses is a commitment the President has made to various organizations, and today it was reiterated to them that while the opportunity to finalize the agreement is not within this specific bill, the current rate will be maintained.”
The measure specifically benefits companies under the SII (Internal Revenue Service) 'pro-SME' regime, which includes firms with average annual revenues of up to 75,000 UF. Business representatives ratified the agreement following the talks with authorities.
Alongside the economic agenda, the debate over President Kast's management of foreign policy has prompted discussions regarding the need for a consistent 'State policy.' An editorial in La Tercera highlighted that foreign policy cannot operate symmetrically with domestic policy, given that mistakes on the international stage are much harder to reverse.
The debate, which included the presentation of the “Guidelines for a State Foreign Policy” prepared by the Permanent Forum on Foreign Policy, featured former Foreign Ministers Alfredo Moreno and Ignacio Walker, as well as former Undersecretary Gloria de la Fuente. The meeting demonstrated a consensus on core principles, such as respect for international law and a new form of multilateralism.
The analysis warns that foreign policy must transcend the ideological preferences of sitting governments to avoid eroding the country's credibility. This is particularly relevant in an international landscape marked by the rivalry between China and the U.S., the crisis facing liberal democracies, and the proliferation of armed conflicts.
