The Chilean Congress has enacted Law Nº21.751, which increases the minimum wage in Chile from CLP 529,000 to CLP 539,000, gross, for workers aged 18 to 65, effective 1 January 2026.1 The rules for legal gratification (“profit sharing”) and certain family and maternity allowances have also changed.
WHY THIS MATTERS
The revised minimum wage and legal gratification cap directly affect employment contracts, payroll calculations, and compliance processes for organizations operating in Chile. It impacts overall compensation budgets and benefit policies, particularly for organizations with employees near the minimum wage threshold. This change also adjusts the maximum cap for legal gratification, or profit sharing, and increases certain family and maternity allowances.
Key Highlights
Minimum wage increase
From CLP 529,000 (2025) to CLP 539,000 gross effective January 2026, applicable to workers aged 18 to 65.
Legal gratification cap (“profit sharing”)
Calculated as (minimum monthly wage x 4.75) / 12; new cap is CLP 213,354 as of January 2026.
Family and maternity allowances
Increased for employees earning less than CLP 1,412,957.
Payroll and tax implications
Changes affect taxes reported on Form 29 and require updates to payroll, accounting, and ERP systems.
KPMG INSIGHTS
In light of the changes, organizations, employers, and entities may wish to consider:
- Employers might consider updating employment contracts, payroll systems, and legal gratification clauses to align with new thresholds. These changes may affect tax reporting on Form 29 and require updates to ERP systems.
- HR, payroll, and mobility teams might consider addressing these changes to avoid compliance issues, penalties, and disruptions for local and international employees.
- Organizations might consider reviewing contracts related to minimum wage and legal gratification, updating payroll and accounting systems for accurate tax and social security reporting, and communicating changes to employees and stakeholders.
If assignees and/or their program managers have any questions or concerns about the scope of the update, its application and potential impacts, and appropriate next steps, they should consult with their qualified tax professional or a member of the GMS tax team with KPMG in Chile (see the Contacts section).
FOOTNOTE:
1 Government of Chile, “New minimum wage increase approved,” published on 18 June 2025.
Contacts
Disclaimer
* Please note the KPMG International member firm in the United States does not provide immigration or labour law services. However, KPMG Law LLP in Canada can assist clients with U.S. immigration matters.
The information contained in this newsletter was submitted by the KPMG International member firm in Chile.
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