In September 2014 Congress approved a tax reform that introduced a new Pigovian or green tax and amended income and indirect tax rates.

The green tax will apply directly to emissions derived from industrial processes that result in environmental damage. The tax will be implemented before the end of 2017 and will affect industrial establishments that use boilers or turbines.

The tax will be charged annually for particulate matter, nitrogen oxide, sulphur dioxide and carbon dioxide emissions produced by industrial establishments whose fixed sources produce thermal power greater than or equal to 50 thermal megawatts, individually or as a whole.

In the case of air emissions and pollutants (ie, multi-pollutants, nitrogen oxide and sulphur dioxide), the tax is calculated using a formula which aims to recognise the damage generated by emissions. As a result, the tax is higher in areas with larger populations in which pollution levels are considered to be saturated or latent.

For carbon dioxide emissions, the tax is set at $5 for each tonne discharged. The tax does not apply to fixed sources that use non-conventional renewable energy sources which rely primarily on biomass.

Taxpayers must monitor their emissions and submit a report to the Superintendence of the Environment in accordance with the latter's general instructions. The Superintendence of the Environment will amalgamate the emission reports submitted by each taxpayer and provide the Internal Revenue Service with the data required to proceed with a tax calculation for each emission source.

Once the amount of tax due has been determined, the payment must be made to the General Treasury in April of the following calendar year to which the emission reports correspond. Payments must be made in Chilean pesos according to the exchange rate in effect on the date of payment. The new green tax will be paid for the first time in April 2018.

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For further information on this topic please contact Trinidad Prieto at Montt y Cia SA by telephone (+56 22 233 8266) or email ( The Montt y Cia SA website can be accessed at