SENCE franchise: reduced from 1 % to 0.7 % and two dates in dispute
Law No. 21,850 reduces by 30% the training credit that companies deduct from their first-category tax. What is unclear is when this reduction will take effect: the law does not specify a date, and the Internal Revenue Service (SII) reports it as of January 1, 2027.
In brief
The SENCE tax franchise goes from 1 % to 0.7 % of taxable income. It's a cut of 30 % of the credit.
Limits are added per worker: the amount attributable cannot exceed 80 % of the cost for remuneration up to 25 UTM, the 50 % between 25 and 50 UTM and the 15 % about 50 UTM. The difference is financed by the company and the worker cannot be transferred.
The courses already registered have six months to adapt: up to the 17-04-2027.
Validity: two readings. The law does not specify a particular effective date for this change, so as a general rule it takes effect from 01-11-2026. The SII, on its law portal, reports the 01-01-2027, without citing the rule.
Legislation · Law No. 21,850, article 29 (modifies articles 36, 37, 42 and 59 of Law No. 19,518) and ninth, twenty-second and twenty-third transitional articles, published in the Official Gazette on 10-17-2026
Verified on 27-10-2026
1. What changes
Article 29 of Law No. 21,850 provides: «Reemplázase, en el inciso primero del artículo 36, la expresión “equivalente al uno por ciento” por “equivalente al 0,7 por ciento”». It makes the same change in article 42 and in the final paragraph of article 59 of Law No. 19,518.
In numbers: for a company with an annual payroll of M$ 1,000,000, the credit limit increases to M$ 10,000 to M$ 7,000. It is a credit that is no longer deducted from the first category tax, not an advance payment that is recovered later.
Reference example, without customer data.
2. The new limits per worker
In addition to lowering the percentage, the law limits how much of the cost of each course can be charged to the franchise, depending on the remuneration of the worker being trained:
| Employee remuneration | Maximum amount attributable to the franchise |
|---|---|
| Up to 25 UTM | 80 % of the cost |
| Between 25 and 50 UTM | 50 % of the cost |
| About 50 UTM | 15 % of the cost |
The company pays the difference, and the law prevents the worker from recovering it: it's a difference. «la que no podrá ser trasladada, directa o indirectamente, al trabajador participante».
3. Since when: the two dates
| Reading | Date | Basis |
|---|---|---|
| General rule of law | 01-11-2026 | Article 29 has no special validity period. Transitional Article Nine stipulates that anything without a specific date remains in effect. «a contar del primer día del mes siguiente al de su publicación en el Diario Oficial» |
| SII | 01-01-2027 | Portal «Reconstruction Law», entry «Modification to the Sence Credit»: «Effective date: January 1, 2027» and «Permanent Regulation». It does not cite an article. |
We are not giving a specific date. Both interpretations are defensible: ours rests on the fact that the law does not assign a special date to this article; the SII's interpretation comes from the agency that administers the credit in the income tax return, but does not show the rule on which it is based.
In practice: If your company has training activities scheduled for November or December 2026, it is advisable to review them on a case-by-case basis before committing to them, taking into account the 1 %.
4. Courses already registered and OTIC
Courses already enrolled. The twenty-second transitional article gives them six months to comply with the new rules. Counted from the date of publication, the deadline ends on 17-04-2027.
OTIC. A new Article 29 bis sets a cap of 10 % of the total contributions administered for the administrative expenses of the intermediate technical bodies for training.
5. The counterweight: more tax revenue
The twenty-third transitional article obliges the Budget Law of 2027, 2028 and 2029 to consider an additional tax contribution of MM$ 10,000 annual, exclusively destined for the training actions of letter d) of article 46 of Law No. 19.518, increasing by that amount the resources executed in 2026. The private franchise decreases and the public contribution increases.
6. Frequently Asked Questions
How much does the SENCE franchise fee decrease?
From 1 % to 0.7 % of taxable remuneration. This is a reduction of 30 % of the credit that is deducted from the first category tax.
Since when has it been in effect?
There are two possible interpretations. The law doesn't specify a particular effective date, so as a general rule it applies from November 1, 2026. The Chilean Internal Revenue Service (SII) states on its website that it will take effect on January 1, 2027, without citing the relevant regulation. We cannot confirm either date.
What happens to courses that are already registered?
They have six months to adapt to the new rules, according to the twenty-second transitional article: until 17-04-2027.
What are the 80, 50 and 15 % limits?
These are the maximum costs of each course that can be charged to the franchise, depending on the employee's salary: 80 % up to 25 UTM, 50 % between 25 and 50 UTM, and 15 % over 50 UTM. The company finances the rest.
Can I charge the worker the difference?
No. The law expressly states that the difference cannot be passed on, directly or indirectly, to the participating worker.
Does anything change for OTICs?
Yes. Their administrative expenses are limited to 10 % of the total contributions they manage (new article 29 bis).
Is there any compensation?
On the public side. Between 2027 and 2029, the Budget Law must include an additional MM$ 10,000 annually for training actions under letter d) of article 46 of Law No. 19,518.
What do I do about my plans for November and December?
Review each case individually before committing to courses that include the 1 %. Until the expiration date is clarified, this is the way to avoid surprises on your tax return.
7. Sources and regulations
- Law No. 21,850, «Para la Reconstrucción Nacional y el Desarrollo Económico y Social», published in the Official Gazette on 17-10-2026, CVE 2888352. Article 29 and articles ninth, twenty-second and twenty-third transitional articles.
- Law No. 19.518, Training and Employment Statute: articles 36, 37, 42, 46 and 59.
- SII Portal, "Reconstruction Law"«, "Modification to the Sence credit" form, consulted on 27-10-2026.
Let's discuss your case
If your company uses the SENCE franchise, the change affects the training budget and the tax credit on your next tax return. We review which actions need adjusting and how the credit will be affected. Check out our service for our payroll & HR service, Write to us via WhatsApp or through our contact form.
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This article is for informational purposes only and does not constitute tax advice for any specific case. The figures were verified against the text of Law No. 21,850 published in the Official Gazette on October 17, 2026, and against the SENCE credit information sheet on the SII website, consulted on October 27, 2026. Content updated as of October 27, 2026.
This English version is a courtesy translation, machine-assisted and reviewed in part. The Spanish version prevails. Literal quotations of Chilean law are kept in Spanish, as a translation of statutory text would not be authentic. Figures and deadlines were verified against the Diario Oficial text of Law No. 21,850 of 17 October 2026. Dates are shown as day-month-year.