Environmental protection and tax law: A review of the 21.210 Act

Abstract

This paper aims to examine the role played by Tax Law in Chile’s environmental protection through the identification of mechanisms used to act on this matter. The first mechanism identified is the establishment of environmental taxes that discourage contaminating behaviours from economic agents. The second mechanism is to incorporate tax exemptions that promote taxpayers to carry out specific actions that are deemed beneficial from an environmental standpoint. These mechanisms are conceptual categories that correlate to both the fixed source tax ruled in Article 8 of the 20.780 Act and the outlay specially ruled in Article 31 N°13 of the Income Tax Law, which are also analysed to determine if they comply with their environmental purposes.