Hybrid financial instruments and entities lack any express regulation within Chilean tax law. This legal void, alongside the highly formalistic interpretation of the law applied by the Chilean tax authorities, has led to a rejection of transparent entities for Chilean tax purposes, and a classification of hybrid financial instruments as “debt” or “equity” based solely on formal arguments. New general anti-avoidance rules (2014) have introduced a substance-over-form principle, which is starting to be factually and preventively applied by the Chilean tax authorities. The following analysis aims to illustrate the above-mentioned trend, in particular as it relates to hybrid financial instruments and entities, traditionally “no man’s land” for tax purposes.