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Regional investment incentives in Chile: the Arica and Austral tax credits on fixed assets and the extreme zones hiring bonus, open until 2035

Last verified: 2026-10-26 · Status: Stable

Chile's main place based incentives are tax credits against corporate income tax for new fixed assets in its far north and far south. In the Arica y Parinacota region the credit is 30 percent of qualifying construction, machinery and equipment (40 percent for some buildings), and in Aysén, Magallanes and Palena it is 32 percent of the first 200,000 UTM invested, falling to 15 and 10 percent on larger amounts, capped at 80,000 UTM per taxpayer. Both are open for investments made until 31 December 2035, can be used against tax until 2055, require full accounts, a minimum project of 500 UTM and five years of permanence of the assets, and come with a 17 percent wage bonus for employers in those zones on a capped portion of pay.

USD figures use the dólar observado of CLP 972.60 per US dollar for 1 October 2026, the latest value shown in the SII dólar observado table on the verification date. UTM amounts use the October 2026 UTM of CLP 72,151 and UTA of CLP 865,812, and UF amounts the UF of CLP 41,221.08 for 26 October 2026, all published by the SII. Conversions are for orientation only.

Key facts

Arica y Parinacota investment credit	30 %DFL Nº 1 of 2001 art. 1, as of 2026-10-26 · in force
Arica y Parinacota credit for Parinacota buildings and high interest tourism property in Arica	40 %DFL Nº 1 of 2001 art. 1, as of 2026-10-26 · in force
Minimum project for the Arica and Austral credits	500 UTMDFL Nº 1 of 2001 art. 1; Ley Nº 19.606 art. 1, as of 2026-10-26 · in force
Last date to invest under the Arica and Austral credits	2035-12-31 dateLey Nº 21.210 art. 15 and 25, as of 2026-10-26 · in force
Last year to use the credits	2055 yearLey Nº 21.210 art. 15 and 25, as of 2026-10-26 · in force
Austral credit on investment up to 200,000 UTM	32 %Ley Nº 19.606 art. 1, as of 2026-10-26 · in force
Maximum Austral credit per taxpayer	80000 UTMLey Nº 19.606 art. 1, as of 2026-10-26 · in force
Minimum years assets must stay in the zone	5 yearsLey Nº 19.606 art. 5; DFL Nº 1 of 2001 art. 4, as of 2026-10-26 · in force
Extreme zones hiring bonus on capped pay	17 %Ley Nº 19.853 art. 1, as of 2026-10-26 · in force

The rule

1. Taxpayers paying first category tax on actual income under full accounts are entitled to a tax credit for investments in the XV Region (Arica y Parinacota) used to produce goods or provide services there. The credit is 30 percent of the value of new or newly built fixed assets that are buildings, machinery and equipment, including real estate mainly used for commercial tourism, directly linked to the taxpayer's business, at their value adjusted at year end before depreciation. Office or housing buildings in certain areas of the commune of Arica also qualify, once per property. Assets not subject to depreciation, assets with a tax useful life under three years, and motor vehicles in general (except special off road vehicles with mounted machinery) are excluded.
Example: New machinery of CLP 1,000,000,000 in Arica gives a credit of CLP 300,000,000. / About US$1,028,172 of machinery gives a credit of about US$308,452.Decreto con Fuerza de Ley Nº 1 of 2001, Ministerio de Hacienda, consolidated text of Ley Nº 19.420 (Ley Arica), Art. 1, first to fifth paragraphs, 2001-09-11 official text · verified 2026-10-26

2. Only projects above 500 UTM qualify. Taxpayers may claim the credit until 31 December 2035, for assets incorporated into the project by then, and may use it until 2055. For buildings or real estate investments in the province of Parinacota the credit is 40 percent, and the same 40 percent applies in the province of Arica to real estate mainly used for commercial tourism declared of high interest by a reasoned resolution of the Director of the National Tourism Service, which must be published on its website.
Cost to do it: 500 UTM minimum project size: CLP 36,075,500 (about US$37,092) at the October 2026 UTM.Decreto con Fuerza de Ley Nº 1 of 2001, Ministerio de Hacienda, consolidated text of Ley Nº 19.420 (Ley Arica), Art. 1, sixth to eighth paragraphs, 2020-02-24 official text · verified 2026-10-26 · changed: Ley Nº 21.210 (Diario Oficial 24 February 2020, art. fifteenth) extended the deadline to claim the credit from 2025 to 2035 and the period to use it from 2045 to 2055.

3. The credit is deducted from first category tax from the year the asset is acquired or built; any unused balance carries forward to the next year, adjusted for inflation. To claim it, the taxpayer reports the total qualifying investment to the SII in the first annual income tax return for the year of acquisition or completion. Movable assets must stay in the region for at least five years from acquisition unless the SII authorises their removal after repayment of the credit. Taxpayers owing overdue taxes, customs duties or tax or customs fines when they deduct the credit lose the right, and the credit cannot be combined with other State bonuses on the same assets granted specifically for the region. False or inaccurate information is punished as tax fraud.Decreto con Fuerza de Ley Nº 1 of 2001, Ministerio de Hacienda, consolidated text of Ley Nº 19.420 (Ley Arica), Art. 2, art. 3, art. 4, art. 5 and art. 6, 2013-02-01 official text · verified 2026-10-26

4. Investors in Arica may also suspend monthly provisional income tax payments (PPM): fully, when the estimated credit for the year equals or exceeds the average first category tax of the last three years, or otherwise up to 25 percent of the year's planned investment outlays, on a sworn statement filed with the SII describing the project, its dates, assets and total amount. Undue suspension makes the payments due with adjustments, interest and fines.Decreto con Fuerza de Ley Nº 1 of 2001, Ministerio de Hacienda, consolidated text of Ley Nº 19.420 (Ley Arica), Art. 1 bis, 2013-02-01 official text · verified 2026-10-26

5. The ban on nationals and companies of neighbouring countries holding real estate in border zones does not apply to real estate in the urban area of the city of Arica and the other areas of the commune listed in the law.Decreto con Fuerza de Ley Nº 1 of 2001, Ministerio de Hacienda, consolidated text of Ley Nº 19.420 (Ley Arica), Art. 19, 2001-09-11 official text · verified 2026-10-26

6. Taxpayers paying first category tax on actual income under full accounts are entitled, until 31 December 2035, to a tax credit for investments in the XI and XII regions (Aysén and Magallanes) and the province of Palena used to produce goods or provide services there, and may use it until 2055. It applies to new or newly built buildings, machinery and equipment, including real estate mainly used for commercial tourism; new aircraft and vessels used exclusively for cargo, passenger or tourism services in the southern zone defined in the law, and tugs and launches serving ships there; and buildings for production, education, health, storage, offices or housing. Assets not subject to depreciation, assets with a useful life under three years and motor vehicles (other than special off road vehicles and the listed vessels and aircraft) are excluded, the credit cannot be claimed twice for the same asset, and investments made to meet art. 12 transitory of the fisheries law are excluded.Ley Nº 19.606 (Ley Austral), incentives for Aysén, Magallanes and the province of Palena, Art. 1, first to fifth paragraphs, 2020-02-24 official text · verified 2026-10-26 · changed: Ley Nº 21.210 (Diario Oficial 24 February 2020, art. twenty fifth) extended the deadline from 2025 to 2035 and the use period from 2045 to 2055.

7. Only investments in qualifying assets above 500 UTM are eligible. The credit rate is 32 percent on the part of the investment up to 200,000 UTM, 15 percent on the part above 200,000 and below 2,500,000 UTM, and 10 percent on the part of 2,500,000 UTM or more, with a maximum credit of 80,000 UTM per taxpayer. Investors may suspend monthly provisional payments on rules like those of Arica, and the credit is deducted from first category tax with carryforward of unused amounts.
Cost to do it: Minimum eligible investment 500 UTM (CLP 36,075,500, about US$37,092). Maximum credit 80,000 UTM (CLP 5,772,080,000, about US$5,934,691).
Example: An investment of 300,000 UTM (CLP 21,645,300,000) earns 64,000 UTM on the first 200,000 and 15,000 UTM on the next 100,000: 79,000 UTM, CLP 5,699,929,000. / About US$22,255,089 invested earns a credit of about US$5,860,507.Ley Nº 19.606 (Ley Austral), incentives for Aysén, Magallanes and the province of Palena, Art. 1, sixth to final paragraphs, art. 1 bis and art. 2, 2004-05-11 official text · verified 2026-10-26

8. Beneficiaries may not use the assets for another purpose or sell them without SII authorisation and prior repayment of the credit, a restriction that runs for the minimum permanence period. Movable assets must be located and operated in Aysén, Magallanes and Palena for at least five years from acquisition, except for the listed vessels and aircraft, which operate in their own defined zone.Ley Nº 19.606 (Ley Austral), incentives for Aysén, Magallanes and the province of Palena, Art. 4 and art. 5, 1999-04-14 official text · verified 2026-10-26

9. From 1 January 2012 until 31 December 2035, employers in the I and XV regions, the provinces of Chiloé and Palena, and the XI and XII regions receive a bonus of 17 percent of the part of taxable pay that does not exceed CLP 182,000, paid to workers domiciled and permanently working there, including part time; the cap is adjusted every 1 January from 2013 by the projected CPI variation reported by the Central Bank. Excluded are domestic workers, the public sector, large and medium copper and iron mining, companies with more than 30 percent State ownership, mining companies with more than 100 workers, banks, financial companies, insurers, reductive fishing companies, pension fund managers, health insurers (ISAPREs), exchange houses, insurance brokers, employers receiving DL 701 forestry bonuses, and self employed professionals. The Treasury pays it; it is lost for any month in which social security contributions were not paid on time.
Example: On the base year cap of CLP 182,000, the bonus was CLP 30,940 per worker per month before CPI indexation.Ley Nº 19.853, hiring bonus in extreme zones, as amended by Ley Nº 20.655 and Ley Nº 21.210, Art. 1 and art. 2, 2020-02-24 official text · verified 2026-10-26 · changed: Ley Nº 21.210 (art. twenty sixth) extended the bonus from 2025 to 2035.

Part of the investment	Credit rate	Tier limit in CLP	Tier limit in USD
Up to 200,000 UTM	32%	CLP 14,430,200,000	about US$14,836,726
Above 200,000 and below 2,500,000 UTM	15%	up to CLP 180,377,500,000	up to about US$185,459,079
2,500,000 UTM or more	10%	above CLP 180,377,500,000	above about US$185,459,079
Maximum credit per taxpayer	80,000 UTM	CLP 5,772,080,000	about US$5,934,691

Ley Austral credit tiers (Ley Nº 19.606 art. 1). CLP at the October 2026 UTM of CLP 72,151; USD at CLP 972.60.

Feature	Ley Arica (XV Region)	Ley Austral (XI, XII, Palena)
Credit rate	30%; 40% for Parinacota buildings and high interest tourism property in Arica	32% / 15% / 10% by tier
Cap per taxpayer	None stated	80,000 UTM
Minimum project	Above 500 UTM	Above 500 UTM
Invest by	31 December 2035	31 December 2035
Use credit until	2055	2055
Permanence of movable assets	5 years in the region	5 years in the zone
Provisional payments	Can be suspended	Can be suspended

Arica and Austral compared.

Worked example

A salmon processing company in Magallanes keeping full accounts invests 300,000 UTM (CLP 21,645,300,000, about US$22,255,089) in a new plant in 2027. Its credit is 32 percent of 200,000 UTM (64,000 UTM) plus 15 percent of 100,000 UTM (15,000 UTM): 79,000 UTM, CLP 5,699,929,000 (about US$5,860,507), just under the 80,000 UTM cap (Ley Nº 19.606 art. 1).
With a first category tax of, say, CLP 1,500,000,000 a year, it uses the credit over about four years, carrying the unused balance forward with inflation adjustment (art. 2), and can suspend provisional payments while it builds (art. 1 bis). It must keep the equipment operating in the zone for five years (art. 5).
The same company also claims the 17 percent hiring bonus on the capped part of each eligible worker's pay, unless it is in an excluded sector; reductive fishing companies are excluded, while fish processing is not on the excluded list (Ley Nº 19.853 art. 1).

Step by step

1. Confirm you pay first category tax on actual income with full accounts; Pro Pyme or simplified regimes need checking against that requirement.
2. Confirm location: XV Region for Ley Arica; XI, XII or the province of Palena for Ley Austral.
3. List qualifying assets (new buildings, machinery, equipment, qualifying vessels or aircraft) and exclude vehicles, non depreciable assets and short life items.
4. Check the project exceeds 500 UTM and plan completion before 31 December 2035.
5. For PPM suspension, file the sworn statement with the SII before the months you want to suspend, and update it each year.
6. Report the investment in the first annual return after acquisition or completion; keep assets in the zone for five years.
7. Keep taxes and customs duties current: overdue debts block the credit when you deduct it.

Common traps

Second hand assets. Only new assets or newly completed buildings qualify (Ley Arica art. 1; Ley Austral art. 1).
Moving equipment out early. Removing movable assets within five years requires SII authorisation and repayment of the credit (Ley Arica art. 4; Ley Austral art. 5).
Overstated estimates for PPM suspension. Suspensions based on an inflated credit estimate make the payments due with interest and fines.
Double dipping. The Arica credit is incompatible with other State bonuses on the same assets granted specifically for the region (Ley Arica art. 5).
Overdue tax or customs debts at deduction time cancel the right for that deduction (Ley Arica art. 5).

Sources

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