The finance committee of Chile's chamber of deputies has adopted amendments to the proposed renewable hydrogen tax credit bill, following consultation with industry participants.
The bill now requires approval from the full chamber of deputies before it can move to the senate for consideration.
Among the changes, the new draft delays the advance payment of 1pc of fixed assets towards social contribution and local development for projects in the Magallanes and Antarctic regions. The fee will have to be paid when projects in the region start construction, to ensure "that projects that may not materialise are not taxed," finance minister Nicolas Grau said.
Industry participants had raised concerns about the previous draft, which proposed that developers pay the 1pc contribution earlier, after completing environmental permitting.
The new draft also establishes criteria for revoking tax credits and applying penalties. Conditions include production delays over six months not caused by delays in securing permits and actual production output being 20pc below what was initially declared without market justification.
Chile's green hydrogen promotion bill will distribute $2.8bn tax credits through six annual tenders between 2025 and 2030, starting with $700mn in 2025 and declining to $300mn for 2029 and 2030 to encourage early market entry.
Credits will be awarded to producers but redeemed by buyers of renewable hydrogen or its derivatives against their corporate income tax, effectively lowering purchase costs and stimulating demand.
The bill also creates a uniform tax regime for producers in Magallanes and Chilean Antartica, including incentives such as exemptions from corporate tax and VAT on imported equipment for the project.
The energy ministry plans to release and update the country's hydrogen production targets in the coming months to reflect the reality of the international market.
