Executive summary

The Chilean Tax Authority has confirmed in rulings No. 205 and No. 206, both dated 28 January 2026, that international contributions — including contributions of Chilean shares between foreign group entities — may qualify for the tax neutrality regime, allowing for tax-neutral business reorganizations under certain circumstance. Similarly, ruling No. 208, also dated 28 January 2026, recognizes that the transfer of a Chilean company through a capital reduction or an in-kind dividend distribution may also benefit from the tax neutrality regime, provided that the transfer forms part of an integrated international reorganization. These and other recent rulings issued in 2025 confirm a more flexible, substance-based approach to international reorganizations, while emphasizing strict documentation, tax-basis continuity and the preservation of Chile's taxing rights.

Background

On 1 November 2024, Law No. 21,713 entered into force, amending Chile's neutral tax reorganization regime and expressly extending its application to international restructurings, subject to new and enhanced compliance requirements. Since then, Chile's Tax Authority (Servicio de Impuestos Internos, or SII) has issued regulatory guidance on a series of rulings clarifying how tax neutrality applies in practice, particularly in complex cross-border reorganizations relevant to multinational enterprises.

Chile's tax-neutral reorganization framework

Before the amendments introduced by Law No. 21,713, Chile's tax-neutral reorganization rules did not explicitly address international restructurings. Nonetheless, in practice, the SII had applied a broad interpretation in certain cross-border contexts, although foreign contributions of Chilean shares were generally excluded.

Under the amended framework, Circular No. 23 of 2025, issued in March 2025, provides general guidance to apply the tax neutrality regime, normally requiring the following conditions: (1) the existence of a legitimate business purpose, (2) the absence of cash flows to the contributor, (3) preservation of the Chilean tax basis, (4) compliance with applicable foreign-law formalities, and (5) the preservation of Chile's taxing rights. Additional restrictions apply for entities resident in "blacklisted" jurisdictions or not subject to accounting obligations under foreign law.

The SII has issued subsequent guidance through a series of rulings clarifying the practical application of this regime.

Key trends and developments from recent rulings

As noted above, SII rulings No. 205 and No. 206, dated 28 January 2026, confirm that international contributions, including those involving foreign group entities, may qualify for the tax neutrality regime.

The SII also allows, under certain conditions, the distribution of shares of a Chilean company — through a capital reduction or an in-kind dividend — to benefit from tax neutrality if the distribution forms part of an integrated international reorganization. Tax neutrality would not be available if the distribution is analyzed as a standalone transaction (see SII Ruling No. 208, dated 28 January 2026).

In the context of international spin-offs, SII Rulings No. 1619, dated 14 August 2025, and No. 1981, dated 8 October 2025, treat these transactions as a combination of contribution and distribution steps rather than as divisions per se, allowing access to tax neutrality if the statutory requirements applicable to international reorganizations are met.

Finally, the SII has also permitted the use of valuation flexibility, allowing transactions to be executed at fair market value or other agreed values for corporate or accounting purposes, provided that the Chilean tax basis is preserved and recorded separately (see SII Rulings 205, 206 and 208 of 2026). At the same time, the SII has emphasized that compliance with foreign-law formalities and robust documentation are crucial and that failures in traceability or documentation may expose transactions to valuation challenges. Safeguarding Chile's taxing rights — particularly in relation to future transfers of Chilean-situs shares — remains a central requirement (see SII Ruling No. 1619 of 2025).

Implications

The SII's recent rulings articulate a consistent interpretative framework under which tax neutrality is available beyond mergers and demergers to include international contributions and integrated step plans.

These developments may affect multinational enterprises with Chilean subsidiaries planning global reorganizations, private equity groups preparing portfolio separations or pre-sale alignments involving Chilean assets and multinational groups contemplating spin-offs, demergers or group rationalizations involving contributions and distributions carried out outside Chile.