Uruguay

National Budget Law 2025–2029 – Tax updates

Uruguay enacted, on 16 December 2025, a National Budget Law for the five-year period 2025–2029 (Law Nbr. 20,446, the ‘Budget Law’) that includes relevant tax provisions. The Budget Law entered into force on 1 January 2026, except for those provisions that expressly establish a different effective date. Below is a summary of the main tax provisions included in the law.

Domestic Minimum Top-Up Tax (DMTT)

In line with the Organisation for Economic Co-operation and Development’s (OECD’s) Pillar Two framework, Uruguay introduced a DMTT to require that large multinational enterprise (MNE) groups pay in Uruguay a minimum effective income tax rate of 15%. The DMTT provisions approved follow the Global Anti-Base Erosion (GloBE) Model Rules standards, with the objective of meeting the ’Qualified‘ status, once evaluated by the OECD Monitoring Centre.

Main features include the following:

• Scope: constituent entities in Uruguay that are part of MNE groups with consolidated revenue ≥ 750 million euros (EUR) in at least two of the last four fiscal years.
• Trigger: when the MNE group's effective tax rate in Uruguay is below 15%.
• Tax base: net admissible income, adjusted by substance exclusions (payroll and tangible assets), aligned with OECD GloBE Model Rules.
• Tax calculation: difference between 15% and the local effective tax rate, applied to the excess income, with additional adjustments.
• International compatibility: aligned with Base Erosion and Profit Shifting (BEPS) Inclusive Framework (IF), including safe harbours and exclusion options.
• Effective date: fiscal years ending on or after 16 December 2025.

Taxation of indirect transfers

Income from the transfer of shares (or other equity interests) in non-resident entities, as well as the assignment of usufruct rights over such interests, are deemed Uruguayan-sourced (thus subject to corporate income tax [CIT] or to non-residents income tax [IRNR], as applicable) when during the 365 days prior to the transfer:

• more than 50% of the entity’s assets (valued according to CIT rules) are directly or indirectly assets located in Uruguay, or
• when the value of such assets exceeds 31.5 million ‘Indexed Units’ (approximately 5 million United States dollars [USD]) and the transaction represents the transfer (directly or indirectly) of more than 50% of such assets located in Uruguay.

Intra-group transfers are excluded, provided specific conditions are met.

The existing condition to trigger the taxation on indirect transfers, which requires that the transferred entity is resident, incorporated, domiciled, or located in low or no-tax jurisdictions, was eliminated.

Dividends and profits distributions

Before the Budget Law, under the previous tax regime, IRNR was applicable on distributions of dividends and profits to the extent the earnings that were distributed were subject to CIT (i.e. the distribution was free from IRNR if it was made out of CIT non-taxable income).

Complementing the referred tax treatment, the Budget Law introduced that dividends and profits paid (or credited) by Uruguayan entities, mandatorily subject to CIT due to their legal type, will be subject to IRNR withholding, provided:

• the dividends/profits are taxed in the beneficiary’s country of residence, and
• the referred jurisdiction grants a tax credit for the tax paid in Uruguay.

If the beneficiary cannot use the tax credit due to a tax loss position, then dividends/profits will be exempt from IRNR in Uruguay.

It is expected that regulations will establish formal requirements to support the conditions necessary to apply the exemption.

Contributions to economic development and attraction of qualified workforce

The Executive Branch has been empowered to grant tax credits to companies that carry out activities in Uruguay that contribute to economic development, such as companies that make significant investments, create direct or indirect employment, promote the development of new technologies, and favour Uruguay’s international integration through the scale of their operations. This benefit will be refunded through credit certificates that can be either endorsed or used to pay other taxes and social security contributions. In the event that the taxpayer cannot effectively use the credits in a term of 42 months after they are granted, the amount of the contribution will be refundable in cash.

Corporate income tax (CIT) regulations on passive income

The Tax Office Resolution Nbr. 488/023 establishes the conditions in which the provisions of Law Nbr. 20,095 and Decree Nbr. 395/022 will apply in relation to certain items of foreign-sourced passive income, including the following:

• Income derived from the sale or economic use of trademarks outside the national territory is considered as Uruguayan sourced when obtained by an entity that is part of a multinational group.
• Income derived from notional interest and from exchange differences will not be considered within the scope of these rules. Exchange rate differences shall not derive from real estate capital yields, dividends, interest, royalties, or from trademarks.
• For the purposes of the determination of the condition of qualified entity, making necessary strategic decisions refers to those related to the acquisition, holding, or disposal of the assets generating passive income regulated by the rules.
• An entity shall be considered to have as its main activity the acquisition and maintenance of equity interests in other entities or real estate when the average at the end of each month of the assets directly associated with such activities represent at least 75% of its total assets during the entire holding period. To be a qualified entity, as far as human resources are concerned, the required extremes will be met when most of its personnel is qualified and based in Uruguay, or when at least it has a qualified Director residing in the national territory.
• The information to be included in the annual affidavits on qualified income and qualified entities is established, as well as the deadlines for filing them. It is determined that the entities must keep the documentation that reliably supports the information provided in the affidavits for the statute of limitations period.

Double tax treaties (DTTs)

The DTT signed in November 2021 between Colombia and Uruguay for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital was approved by the Uruguayan Parliament on 12 December 2022. Approval by the Colombian Parliament is still pending.

Low-or-no-tax jurisdictions (LNTJs)

The Executive Power established the requirements for a country to be considered as an LNTJ. In this context, the Uruguayan tax authorities are empowered to issue a consolidated list for tax and transfer pricing purposes of countries, jurisdictions, and regimes that meet the conditions in order to be considered as an LNTJ.

On 30 December 2024, the Uruguayan tax authorities issued Resolution 3034/024, which became effective from 1 January 2025. According to this Resolution, as of 1 January 2025, the following jurisdictions are considered as an LNTJ:

Value-added tax (VAT) relief of tourist activities

The regulations establish that the following activities will have a reduction of 9% in the VAT rate (standard rate 22%), provided the transactions are executed through electronic means:

• Gastronomic services provided by restaurants, bars, canteens, cafes, tea rooms, and alike, or by hotels, motels, apart hotels, inns, tourist stays, country hotels, tourist farms, country inns, country houses, and camping hostels, provided that the services do not include lodging.
• Catering services for parties and events.
• Parties and events services not included above.
• Vehicles rental without chauffeur.
• Mediation services for the leasing of real estate for tourist purposes.

For VAT payers under the 'small companies regime', the reduction is determined by applying a discount of 18.03% on the total amount of the transaction.

The above-mentioned benefit was extended in the past and is currently available until 30 April 2026.