Municipalities in Chile are, by constitutional mandate, territorially and functionally decentralized bodies that have their own capital.

Municipal income comes from various sources, among its own resources the property tax stands out, which is collected by the central government but distributed to the municipalities; commercial patents; and vehicle taxes (vehicle licenses and transfers). Municipal governments have limited autonomy to set rates or rates, except for commercial patents. They also have regulatory limitations to charge fees for provision of public services, which are generally granted to the central government.

Regarding transfers, Chilean municipalities have an inter-municipal fund called the Municipal Common Fund, which is horizontal and redistributive. They also have transfers from the central government for social and municipal investment programs and the municipalized health and education sectors.

Additionally, local governments can access financing mechanisms from Public-Private Partnerships and international cooperation funds for urban development. However, they have very limited access to internal and external debt instruments.