The R&D Law we know today is not the one enacted in 2008. Understanding how it changed helps explain why it works the way it does, and why people are still debating how to improve it.
2008: a law built only for “outsourcing”
Law 20,241 was passed in 2008 with a clear goal: increase private investment in research and development in a country that invested very little. But its original design was narrow:
- It only allowed “extramural” projects: the company had to outsource the R&D to a registered research centre. If it had its own engineers or scientists, it couldn’t use them.
- The credit was capped at 15% of the company’s annual gross income, with a maximum of 5,000 UTM.
- Companies saw the up-front review as slow and cumbersome.
The results were poor. According to Corfo figures cited in a University of Chile thesis (Olivares, 2014), only US$14.4 million in R&D projects were raised under the original law between 2008 and 2012.
2012: the reform that changed the game
In March 2011 the government submitted a bill to amend the law, and after just over a year in Congress, Law 20,570 (2012) was passed. Its main changes:
| Before (2008) | After (2012) |
|---|---|
| Only contracts with registered centres | Intramural projects added, using in-house capabilities |
| Cap of 15% of gross income | That cap removed |
| Maximum credit of 5,000 UTM | Maximum 15,000 UTM per year |
The logic was simple: most business R&D happens inside companies, not at universities. Opening up the intramural mode meant a company with its own technical team could use the benefit. We explain both modes in Intramural vs. extramural.
The debate also drew criticism. Some legislators warned that tripling the cap would mainly benefit large companies, and others proposed extra incentives for the regions, an idea that didn’t prosper.
Today: in force until 2035
According to Corfo’s FAQ, contracts and projects certified up to December 31, 2035 are eligible. Since September 2024, applications are made through an online platform.
What is still being debated
A University of Chile study (Weber, 2022) reviewed proposals in that year’s tax reform bill, including:
- Raising the annual credit cap from 15,000 to 45,000 UTM.
- Making the benefit permanent, with no end date.
- Including companies under the Pro Pyme (SME) tax regimes and letting some of them recover unused credit.
These are proposals, not changes in force. But they show where the debate is heading: making the incentive more accessible to small companies and more stable over time.
Our take
The R&D Law’s history is that of a generous instrument that took a while to find its shape. The 2012 reform fixed the most serious problem, which was ignoring R&D done inside companies. The remaining challenge is getting more companies to use it, not just large ones. We look at that in The R&D Law paradox.
This article is for information only and is not tax advice. Sources: Law 20,241, Law 20,570, Corfo’s FAQ, Olivares (2014) and Weber (2022), University of Chile.