The following key points are highlighted: 

1. Additional Minimum Domestic Tax: Implementation of an Additional Minimum Domestic Tax applicable when the effective tax rate of a multinational group in Uruguay is less than 15%. This is aligned with Pillar 2 of the OECD, affecting certain multinational groups with  consolidated revenues exceeding 750 million Euros. It is also clarified that this tax is not exempted under the Free Zones Act, as was already the case, for example, with special social security contributions.  

2. Capital Gains Abroad:Capital gains from investments made abroad by individuals who are tax residents in Uruguay are taxed, seeking to expand the scope of current taxation, and including from this bill capital increases of assets abroad (for example, sale of shares abroad) as well as real estate capital returns derived from such assets. Further, the possibility of deferring taxation through entities is limited, as income will be allocated as if it had been obtained by individuals. The bill provides that taxpayers may be added for payment of capital income from abroad whenever subject to allocation. 

3. Impatriates Regime. Tax Holiday:An impatriate regime is created enabling individuals who become tax residents from January 1, 2026 to choose to tax Non-Residents Income Tax on their capital income from abroad (meaning that no taxes will be paid for such income - Tax Holiday-) to the extent that they make certain investments to be determined by the Executive Branch through a future Executive Order. The option will be for the year when the change of residence is verified and the following 10 years. It is expected that they will be taxed at 50% for 5 more years. The current Tax Holiday regime will be maintained for individuals who have exercised the option until 2025. Individuals who do so from 2026 onwards will be included in the aforementioned regime.

4. Amendments to the taxation of dividends: The hypotheses of dividends paid by entities resident in Uruguay taxed at 7% are extended (case of non-resident shareholders paying taxes in their country who may apply tax credits for amounts paid in Uruguay).

5. In some cases, sales of equity interest of non-resident entities involving indirect transfers of assets in Uruguay are taxed:

The bill sets forth that income derived from the sale of equity interest of non-resident entities will be taxed by Economic Activities Income Tax, Personal Income Tax, and Non-Residents Income Tax, provided that they have a relevant link with Uruguay, that is, provided that any of the following conditions are verified, at any time during the period of 365 days preceding such transfer: a) more than 50% of the non-resident entity’s assets is formed, directly or indirectly, by property located in the country, or b) the value of such property as referred to above exceeds 31,500,000 U.I. (approximately USD 5,000,000). Likewise, equity interest purchasers are held liable for third-party tax obligations, both in the case of sales of equity interest of resident entities and non-resident entities when they become taxed.

6. Amendments to the taxation of personal services: Compensation related to the provision of non-dependent personal services becomes taxed by Personal Income Tax, and VAT deduction on vehicles and other goods becomes limited, for Economic Activities Income Tax taxpayers who opted to be so.

7. FONASA and IRPF credits for employment income to offset with taxpayers’ debts for these taxes:Government may offset debts with credits receivable that the taxpayer may have.

8. Talent Fostering:Measures are reintroduced to attract foreign qualified talent in scientific and technological sectors. These individuals may choose to tax Non-Residents Income Tax and waive the Uruguayan social security system. This option will be subject to certain conditions and to a time limit. Likewise, the employers of those individuals who opt for the talent attraction regime created by the bill are held liable as substitutes for Non-Residents Income Tax purposes.

9. Special Donations Regime:Changes in percentages of credits and deductible expenses (changes from a regime of 70% of the amount donated as credit and 30% as expense to a regime of 50%/50%). The maximum amount per entity is reduced.

10. Tax credit for companies contributing to the development of certain objectives of interest to the Government:The possibility of granting credits under the exporters regime to certain companies is set forth. Any credits that may not be used within 42 months of their granting may be acquired by the National Treasury (at its par value).

11. Incentives for companies carrying out audiovisual projects in Uruguay:The Executive Branch is empowered to implement mechanisms to boost companies whose projects develop the sector and render it internationally competitive.

12. Technology Import:Simplified regime for scientific-technological MSMEs in the import of technological inputs.

13. Amendments of taxes and allowances applicable to the international postal shipments regime:VAT will be taxed on on-line retail purchases abroad considering the “TEMU” effect. A minimum amount of taxation of USD 20 is provided. The allowances regime and maximum thresholds for each import are amended. The Executive Branch is further empowered to appoint liable taxpayers for third-party tax obligations or withholding agents in these cases.

 

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Please feel free to contact our Tax Team if you require any further information or to examine how these amendments may impact your personal or corporate situation.