The 2025-2029 National Budget Bill introduces tax changes, investment incentives, and institutional reforms that may redefine Uruguay’s positioning as a destination for capital and innovation.
We summarize the main aspects that the bill would modify regarding investment benefits and outline practical implications for each.
1.New Domestic Minimum Tax (Pillar Two, 15%)
Uruguay introduces the Domestic Minimum Top-Up Tax (IMCD) for multinational groups, ensuring a minimum effective tax rate of 15%. Substance-based exclusions (employment and tangible assets) are provided, protecting projects with real presence in the country.
Practical implication: Uruguay aligns with the global standard without dismantling pro-investment regimes. Those generating real substance (jobs and assets) mitigate the top-up through exclusions. Key actions include modeling the effective rate per local entity and reviewing transfer pricing.
2.Skilled Talent Attraction Regime
A benefit is created for individuals who have not been tax residents in the past 5 years and relocate to work in Uruguay, allowing them to opt for IRNR instead of IRPF and granting partial social security exemptions for 5 years.
Practical implication: Supports executive and technical relocation for tech, financial, and global service companies. Reduces total labor cost during initial settlement and accelerates the capture of scarce profiles.
3.Institutional Merger for Investment Promotion
The National Directorate of Free Zones will become the National Directorate for Investment Incentives, incorporating the coordination of COMAP. A single body will oversee investment promotion, free zones, and tax benefits.
Practical implication: A single “state hub” for investments can lead to more predictable procedures aligned with capital attraction.
4.Tax Transparency Adjustments
Strengthened rules for imputing passive income from non-resident entities and ultimate beneficial owners, with greater precision in exemptions and the definition of entities for tax purposes.
Practical implication: Seeks greater symmetry between local and offshore structures when there is control or resident beneficiaries. Holding chains should be reviewed to avoid unexpected imputations and to assess classification, qualified entity, and qualified activity status.
5.Public Procurement and Digitalization
Generalization of the electronic domicile and mandatory communication via digital means with DGI and BPS, along with adjustments to state procurement procedures for greater efficiency and traceability.
Practical implication: Less operational friction but requires document governance and alerts to avoid penalties for missed electronic notifications.
6.Greater Predictability in Merger Control
Changes in timelines and procedures for the Competition Promotion and Defense Commission, favoring clearer schedules for mergers and acquisitions.
Practical implication: Improves the environment for M&A and private equity by providing greater certainty and efficiency to processes.
7.Greater DGI Access to Financial Information
The DGI may directly request information from financial institutions regarding clients’ transactions, balances, and movements for tax purposes, without prior judicial authorization.
Practical implication: Increases the need to align tax returns and financial records, as the DGI will have immediate comparison capabilities. Reinforces the trend toward full financial transparency, in line with CRS and automatic exchange of information.
8.Tax on Foreign Income from Capital Increases
The IRPF will tax income earned abroad from capital increases, redemptions, amortizations, or sales in non-resident entities, when they represent benefits for the taxpayer, such as capitalization of profits or share premiums.
Practical implication: Strengthens the partial worldwide income principle for tax-resident individuals in Uruguay, continuing the process of moving beyond the territorial income criterion for certain passive foreign income (dividends, interest, and royalties).
9.Free Zones and Neutral Impact Strategy under Pillar Two
Uruguay seeks to adapt its Free Zone regime to Pillar Two rules without losing competitiveness or affecting current users, applying a country-by-country strategy:
- If the parent company’s jurisdiction taxes profits under the Pillar Two top-up tax, Uruguay would only apply the portion corresponding to activity generated in its territory.
- If the parent company’s jurisdiction does not levy the minimum tax, Uruguay would not apply it, avoiding a total tax burden above 15%.
- The value proposition of Free Zones as an export platform for goods and services would be maintained, ensuring contractual certainty and new investment attraction.
Practical implication:
- Certainty for current users with long-term plans under the existing regime.
- Avoids double taxation and preserves competitiveness against other Latin American free zones.
- Positions Uruguay as an OECD-aligned jurisdiction with a pragmatic approach to protecting installed investment.
Comparative Table – Country-by-Country Strategy in Free Zones under Pillar Two
Scenario |
Parent jurisdiction levies top-up tax (15%) |
Parent jurisdiction does not levy top-up tax |
| Impact in Uruguay | Only the portion attributable to Uruguay-generated activity is taxed, avoiding double taxation. | No tax in Uruguay, keeping the effective rate below 15% and preserving the incentive. |
| Competitiveness effect | Relative fiscal neutrality; location advantage and contracts maintained. | Full fiscal advantage and Free Zone appeal preserved as a regional hub. |
| Recommendation | Review country-by-country structure and local substance to optimize top-up calculation. | Maintain formal compliance and monitor changes in parent jurisdiction. |
Strategic Outlook: Uruguay’s Positioning as an Investment Hub
- Fiscal competitiveness: adopts Pillar Two while preserving real incentives.
- Human capital: encourages global talent relocation.
- Institutional simplification: unifies the investment promotion office.
- Legal security: regulatory adjustments aligned with OECD practices.
- Infrastructure and logistics: prioritizes strategic projects for trade and industry.
- Estate planning: new foreign capital increase taxation requires redesign of international structures.
- Protected Free Zones: neutral impact policy ensures Pillar Two transition does not erode regime attractiveness.
This document summarizes a bill submitted by the Executive Branch. Measures will take effect once approved and regulated. A case-by-case assessment is recommended before making decisions.
At Carlos Picos Consultora, we help companies and international investors structure their operations in Uruguay, maximizing tax benefits, ensuring regulatory compliance, and enhancing their regional strategy.
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