A Chilean think tank has proposed raising company tax rates from 17% to 25% in a bid to fund education, health and business development, website Lanacion.cl reported.

Fundación Chile 21 (Foundation Chile 21) estimated the increase would increase government revenues by more than US$4 billion.

The organization said the aim of the reforms was to reduce the tax burden on smaller companies through higher concentration of payments from highly profitable large businesses.

"We welcome that the Renovación Nacional (National Renewal) has announced its willingness to discuss tax reform," the foundation was quoted as saying.

"We agree with its proposal to increase the percentage of first tier tax that is applied to the profits of companies, and with the necessity to evaluate the rate of VAT (value added tax) on functions of other variables and the total revenue."

The organization said the proposed changes would create more incentives for small businesses, while also arguing it would have a neutral impact on a macroeconomic level as funds would be re-allocated to current expenditure and investment, the story reported.

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