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Buying an electric car in Chile is no longer just an environmental decision: it's also a financial decision. In recent years, the State has been building a set of tax incentives that make the total cost of ownership of an electric vehicle significantly lower than that of an internal combustion vehicle. However, many buyers — and also many companies — don't know them in detail or take advantage of them properly.
This is the most visible benefit and the one that directly impacts anyone who buys an electric vehicle, whether for personal or business use. It was established by Law No. 21,505, published in November 2022, which promotes electromobility in Chile.
The standard establishes a phased scheme for exemption and reduction of the annual tax for driving licenses. It applies to electric vehicles, hybrids with external electric recharging (so-called PHEV) and others qualified as “zero emissions” by the Ministry of Energy, provided that their year of manufacture is 2021 or later.
How does this translate into money? The driving permit in Chile is calculated as a percentage of the assessed value of the vehicle according to the SII. For medium-high priced cars, that permit can easily exceed one million pesos per year.
Vehicle: Tesla Model Y 2023 (pure electric)
SII 2024 valuation: $64,176,177
2024 driving permit: $0 (full exemption, first year)
Estimated permission without benefit: approx. $1,900,000
A combustion equivalent vehicle of that value would pay close to $1,900,000 in the first year alone. During the first two years, cumulative savings exceed $3,800,000. In the following six years, the savings are still partial but significant, achieving a total estimated savings of more than $10,000,000 over nine years.
Vehicle: Nissan X-Trail PHEV 2023 (hybrid with external recharging)
SII 2024 valuation: $33,654,851
2024 driving permit: $1,107,072 (Law 21,505 applies, 25%)
Estimated permission without benefit: approx. $1,476,000
Although the vehicle was already in its third year, it still paid only 25% of the normal permit, generating savings of approximately $370,000 in that year.
When buying a new light or medium vehicle in Chile, an additional tax is paid, popularly known as the “green tax”, established in Article 3 of Law No. 20,780. This tax is calculated based on two variables: the vehicle's nitrogen oxide (NOx) emissions and its urban performance in kilometers per liter.
Electric vehicles have zero NOx emissions. Since the tax formula directly considers that level of emissions, the result is that they pay practically no green tax, or they pay it in a negligible amount. This represents an immediate savings in the purchase price that, depending on the model, can range from $300,000 to more than $1,500,000 in higher-value vehicles.
A medium combustion SUV with a 2.0 turbo engine can pay between $600,000 and $1,200,000 in green tax at the time of its first registration. An electric SUV equivalent in price pays $0 or a value close to zero for this concept, simply because the variable of NOx emissions, which is the main driver of the tax, is zero.
This benefit is less well known but can be very significant for first-rate taxpayers — companies, corporations, professionals with full accounting — who purchase electric or hybrid vehicles as part of their fixed assets.
Energy Efficiency Act No. 21,305 empowered the SII to establish a differentiated lifespan for these vehicles. The SII exercised this power through Exempt Resolution No. 56 of 2021, setting the following parameters:
This means that a company that buys an electric car can deduct 100% of its value as an expense in the first tax year (accelerated depreciation), instead of deducting it in 7 annual installments. The effect is a significant reduction in the first-rate tax base in the year of the acquisition.
This benefit applies to vehicles started to be used from February 13, 2021 and until February 14, 2031, which still gives several years of window to take advantage of it.
Situation: In January 2025, a limited liability company acquired an electric vehicle for executive use, for a value of $30,000,000.
Here we must be clear: there is no special VAT exemption for the purchase of electric vehicles intended for natural persons. The general rules of DL 825 continue to apply. For companies, the VAT tax credit incurred on the purchase is also governed by the general rules of Article 23, which means that if the vehicle qualifies as a car or station wagon, authorization will be required from the SII Regional Director to make use of the credit, regardless of whether it is electric or not.
To access the benefits of Law 21,505, the vehicle must meet at least one of these conditions:
Conventional non-plug-in hybrids (HEV), such as the standard hybrid Toyota Corolla, do not qualify for these benefits, since their battery is recharged only with the combustion engine and regenerative braking, without external recharging.
Taking into consideration the three benefits together:
Profile Reference Vehicle Price Estimated Business Period Savings $30,000,000 (new EV) Over $15,000,000 First 2 yearsNatural person~$64,000,000 (Tesla Model Y, SII valuation) $3,500,000 — $8,000,000 9 yearsSavings for companies consider accelerated depreciation, exemption from driving licenses and non-application of green tax, calculated on an electric vehicle of $30,000,000. For individuals, the savings come mainly from the exemption from driving licenses and green taxes, estimated on a vehicle with an SII valuation of ~$64,000,000 (Tesla Model Y 2023). In both cases, the amount varies depending on the actual value of the vehicle purchased.
This article is for general informational purposes and does not constitute tax or legal advice. The amounts indicated are estimates and may vary depending on the vehicle, year of manufacture and valuation of the SII. In specific cases, it is recommended to consult a tax advisor.