Chile R&D Tax Credit: 35% Innovation Tax Benefit

Program Overview

Chile's R&D Tax Credit, administered by CORFO under Article 33 bis of the Income Tax Law, provides a 35% tax credit on qualified research and development expenses. This powerful tax incentive helps companies offset innovation costs while reducing their overall tax burden.

The program encourages private sector investment in R&D by allowing companies to claim both a 35% tax credit and a 65% tax deduction on the same expenses. This dual benefit significantly reduces the net cost of innovation activities, making Chile one of Latin America's most attractive destinations for R&D investment.

Tax Credit Structure

The R&D tax credit operates under a dual-benefit structure:

35% Tax Credit: Companies receive a tax credit equal to 35% of qualified R&D expenses. This credit directly reduces corporate income tax liability, providing immediate cash benefit.

65% Tax Deduction: In addition to the 35% credit, the remaining 65% of R&D expenses are fully tax-deductible as business expenses, further reducing taxable income.

Combined Benefit: When both benefits are applied, companies can recover a significant portion of their R&D investment through reduced tax obligations. The effective subsidy rate approaches 50% when combining the credit and deduction.

Annual Cap and Limits

The tax credit is subject to an annual cap of 15,000 UTM (Unidad Tributaria Mensual). As of 2026, this represents approximately 1 billion Chilean pesos or roughly $1.1 million USD, providing substantial tax relief for R&D-intensive companies.

The credit can be applied against corporate income tax liability for the current year. Any unused credit can be carried forward to offset future tax obligations, ensuring companies fully benefit even in years with lower profitability.

Eligible R&D Expenses

Qualified R&D expenses include:

Personnel Costs: Salaries and benefits for researchers, engineers, and scientists directly engaged in R&D activities.

Materials and Supplies: Raw materials, prototyping materials, and consumables used in R&D projects.

Equipment and Facilities: Costs of specialized R&D equipment, laboratory facilities, and testing infrastructure (subject to depreciation rules).

Contracted R&D Services: Payments to universities, research institutions, or specialized R&D firms for research activities conducted on your behalf.

Intellectual Property Costs: Patent application fees, trademark registration, and IP protection expenses directly related to R&D outcomes.

Eligibility Requirements

Chilean-registered companies: Must be legally incorporated in Chile and subject to Chilean corporate income tax.

R&D Definition: Activities must meet CORFO's definition of research and development, focusing on creation of new knowledge, products, processes, or services with technological innovation.

CORFO Certification: R&D projects must be certified by CORFO before claiming the tax credit. This ensures activities qualify under the program's innovation criteria.

Documentation Requirements: Companies must maintain detailed records of R&D expenses, project activities, and innovation outcomes for audit purposes.

Application Process

1. Project Registration: Register your R&D project with CORFO before incurring expenses. Provide project description, objectives, innovation elements, and budget.

2. CORFO Evaluation: CORFO evaluates whether your project qualifies as legitimate R&D under the program criteria. Approval typically takes 4-8 weeks.

3. Execute R&D Activities: Conduct your certified R&D project, maintaining detailed expense documentation and project progress records.

4. Claim Tax Credit: When filing your annual corporate tax return, claim the 35% tax credit for certified R&D expenses. The Chilean tax authority (SII) processes the credit against your tax liability.

Success Tips

Register projects early: Submit CORFO certification applications before starting R&D activities to ensure eligibility.

Document innovation: Clearly articulate the technological advancement or novel knowledge your R&D creates. Routine product improvements typically don't qualify.

Track expenses meticulously: Maintain separate accounting for R&D expenses with detailed time tracking for personnel costs.

Leverage external partnerships: Collaborating with Chilean universities or research institutions can strengthen your certification application and access additional R&D support.

Contact Information

CORFO (Corporación de Fomento de la Producción)

Website: www.corfo.cl

Email: info@corfo.cl

Phone: +56 2 2631 8200

Address: Moneda 921, Santiago, Chile