Chile's green tax on stationary sources

The green tax on stationary sources is Chile's levy on air emissions from certain establishments. It sits in article 8 of Law 20,780, the 2014 tax reform, and its current wording comes from the amendment introduced by Law 21,210 on tax modernisation, published in the Official Gazette on 24 February 2020. That version has applied since 1 January 2023, to emissions generated from that year onwards.

In one line: if your establishment emits 100 or more tonnes of particulate matter a year, or 25,000 or more tonnes of CO2 a year, it is taxable.

The taxable event and the 2023 change of criterion

Four compounds are taxed when released into the air:

• Particulate matter (PM)
• Nitrogen oxides (NOx)
• Sulphur dioxide (SO2)
• Carbon dioxide (CO2)

The most important change brought by Law 21,210 is the entry criterion. The previous text defined the taxable event by installed thermal capacity: establishments with boilers or turbines that, individually or together, reached or exceeded 50 MWt of nominal thermal capacity. The current text removes thermal capacity as an element of the taxable event and replaces it with actual emission thresholds: 100 or more tonnes of PM a year, or 25,000 or more tonnes of CO2 a year.

This distinction still causes errors in internal documentation: any procedure that still determines liability using the 50 MWt figure is out of date.

Definitions that matter

• Establishment: premises where one or more economic activities are carried out that involve the transformation of raw materials or of the materials used, or that give rise to new products, and whose emitting sources are under single or coordinated operational control.
• Emitting source: a stationary source whose emissions are generated, wholly or in part, from combustion.

The definition of establishment is what forces you to add sources together: the thresholds are measured across all emitting sources under single or coordinated operational control, not source by source.

How it is calculated

In addition, if the establishment is in a municipality that forms part of a zone declared saturated or latent for PM, NOx or SO2 concentration, an additional factor is applied to the rate per tonne. Location therefore changes the bill.

Who does what

• The Superintendency of the Environment (SMA) quantifies emissions and publishes the list of establishments that exceeded the annual limits, determining who is liable.
• The Ministry of the Environment publishes annually the list of establishments falling under the first paragraph of article 8 and of the municipalities declared saturated or latent for these purposes. It also issued the regulation developing the tax, complemented by the SMA's technical monitoring guidelines.
• The Internal Revenue Service (SII) assesses and notifies the tax in US dollars.
• The Treasury Service receives payment.

When it is paid and how it is declared

Payment is made to the Treasury Service in April of the calendar year following the generation of the emissions, in local currency at the exchange rate in force on the payment date, after assessment by the SII.

Registration and filing for liable establishments run through the green tax system inside the RETC Single Window. The RETC regulation itself lists, among its contents, the registers of boilers, turbines and establishments subject to the article 8 tax.

Tax treatment

The tax paid under article 8 of Law 20,780 can be deducted as an expense when determining taxable net income for First Category Income Tax, under paragraph 2 of the fourth subsection of article 31 of the Income Tax Law.

Frequently asked questions

Does the 50 MWt threshold still apply?

No. Since 1 January 2023 the taxable event is defined by actual emissions: 100 or more tonnes of particulate matter a year, or 25,000 or more tonnes of CO2 a year.

How much is paid per tonne of CO2?

USD 5 per tonne emitted, except for sources operating on non-conventional renewable generation from biomass.

Are emissions from all my sources added together?

Yes. The thresholds apply to the establishment's emitting sources individually or together, an establishment being premises whose sources are under single or coordinated operational control.

Does the tax cover scope 2?

No. It taxes emissions from your own stationary sources generated through combustion. Purchased electricity is not part of the taxable event, although it is part of your corporate carbon footprint.

Knowing whether you cross the thresholds requires a combustion inventory by source and by year, not an aggregate estimate. At Manglai we help build and maintain that level of detail. Start with our carbon footprint solution.