Uruguay

Net income derived from business activities conducted in Uruguay, obtained by legal entities resident in Uruguay and non-residents operating through a permanent establishment (PE) in Uruguay, is taxed at a CIT rate of 25% under the source principle (i.e. the territorial system of taxation). Accordingly, Uruguay taxes only income that is derived from activities conducted within its borders, income generated from property located in Uruguayan territory, or income derived from the economic use of rights within its territory (see Foreign income in the Income determination section for an exception to this principle).

In order to determine the net taxable income, all accrued expenses that are necessary for the generation of Uruguayan-source income and that are duly documented are allowed as deductions. Additionally, taxpayers are able to deduct expenses from their gross income if such expenses are subject to taxation (either foreign or local taxation) in the hands of their counterpart. A compulsory proportional deduction must be calculated when the taxation in the hands of their counterpart is lower than 25% (CIT rate).

A 12% withholding tax (WHT) is imposed on Uruguayan-sourced income obtained by non-residents, except in cases where the income is obtained through the operations of a PE in Uruguay (see the Withholding taxes section for more information).

Domestic Minimum Top-Up Tax (DMTT)

In line with the OECD’s Pillar Two framework, Uruguay introduced a DMTT to require that large MNGs pay in Uruguay a minimum effective income tax rate of 15%. The DMTT provisions approved follow the GloBE Model Rules standards, with the objective of meeting the “Qualified” status, once evaluated by the OECD Monitoring Centre.
Main features:
i) Scope: constituent entities in Uruguay that are part of MNGs with consolidated revenue ≥ €750 millions, in at least two of the last four fiscal years.
ii) Trigger: when the MNG's effective tax rate in Uruguay is below 15%.
iii) Tax base: net admissible income, adjusted by substance exclusions (payroll and tangible assets), aligned with OECD GloBE Model rules.
iv) Tax calculation: difference between 15% and the local effective tax rate, applied to the excess income, with additional adjustments.
v) International compatibility: aligned with BEPS Inclusive Framework (IF), including safe harbors and exclusion options.

Trading companies

Uruguayan corporations that sell and buy foreign goods and/or services from Uruguay (which are not physically introduced to the country, in the case of goods; or which are not economically used in Uruguay, in the case of services) may determine the net Uruguayan-source income on a notional basis of 3% of the gross margin (difference between the selling price and the purchase price). This gross margin has to be compliant with transfer pricing rules (in line with Organisation for Economic Co-operation and Development [OECD] guidelines). The applicable effective CIT rate is 0.75% (25% x 3%).

Local income taxes

No taxes on corporate income may be levied by municipal authorities or other local governments.