Chile plans Tax Credits for Housing Developers

A new bill by the Chilean government offers sweeping incentives to low income families and housing developers when purchasing solar water heaters. The chamber of deputies’ Finance Committee approved the draft in November of 2008 and it is now on its way to be approved by parliament. The proposed legislation is expected to come into effect in the first half of 2009.

The bill provides tax credits for installing solar thermal systems in newly built homes. The percentage varies between 20% and as much as 100%, depending on the value of the building, which would be calculated in Unidades de Fomento (UF). UF is a unit of account that has been used in Chile since 1967. The exchange rate between the UF and the Chilean peso is constantly adjusted to inflation, so that the value of the Unidad de Fomento remains constant.

The details of the tax credits, described in article 4 of the bill, are shown by the following table:

Value of the building in UF Value of the building in Chilean peso (CLP) Value of the building in US Dollar Tax credit
<2,000 <42 million <68,695 100%
2,000 to 3,000 42 to 63 million 68,695 to 103,042 40%
3,000 to 4,500 63 to 309 million 103,042 to 501,093 20%
>4,500 >309 million >501,093 0%

Exchange rates of 27th of January 2009

 

 

The tax credits – once they pass parliament – are intended to cover a five-year period of investments. For receiving tax credits, solar water heating systems must provide at least 30 % of the average annual hot water demand estimated for the specific building. 
Further information: http://valoruf.cl/

National Energy Commission (CNE): www.cne.cl

Download the draft law approved by the Finance Committee: draft of tax credit bill in chile

 

draft of tax credit bill in chile.doc 78.8 Kb [501 download(s)]
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