URUGUAY Trends and Developments Contributed by: Fabian Birnbaum, FBM Advisory
of this new philosophy. For countries like Uruguay, whose development strategy historically included targeted incentives, this development posed a fun - damental challenge. Minimum taxation and the defence of jurisdiction The introduction of the domestic minimum comple - mentary tax ( impuesto mínimo complementario domé - stico – IMCD) is Uruguay’s answer. By incorporating the framework promoted by the OECD and the G20, Uruguay ensures that when mul - tinational groups with consolidated revenues above EUR750 million face an effective rate locally below 15%, the difference will be collected domestically rather than abroad. From one perspective, the decision is pragmatic and almost inevitable. If Uruguay did not apply the top- up, another jurisdiction would. The IMCD therefore preserves a portion of taxing rights connected to eco - nomic activity performed within the country. For decades, incentives were evaluated primarily on the basis of domestic impact. Under Pillar Two, their relevance must also be assessed at the group level. An exemption granted locally might no longer trans - late into a global saving; instead, it may merely change where the tax is ultimately paid. Stability and credibility in practice Soon after the approval of the IMCD, the executive power issued a decree to address one of the most sensitive issues raised by investors: the coexistence of the new tax with pre-existing fiscal stability agree - ments. Numerous companies had committed capital under legal frameworks guaranteeing that certain tax con - ditions would remain unchanged for defined periods. Ignoring those assurances would have jeopardised Uruguay’s most valuable asset: credibility. The decree establishes that where the complemen - tary tax levied in Uruguay exceeds what would have been imposed abroad under the Inclusive Framework rules, taxpayers may obtain a partial or total waiver. If amounts were already paid, reimbursement mech -
anisms apply. At the same time, beneficiaries must initiate formal procedures and authorise international information exchange. Thus, legal certainty is pre - served without retreating from transparency. The solution is emblematic of Uruguay’s style: comply internationally while honouring commitments. Substance and economic reality Another defining feature of the IMCD regime is the recognition of substance. Carve-outs associated with payroll and tangible assets mitigate exposure where real operations exist. The message is subtle but important: productive investment continues to matter. This aligns with Uruguay’s broader historical pref - erence for encouraging genuine activity rather than purely formal structures. Incentives revisited What changes, therefore, is not the existence of pro - motional tools but their strategic function. They may influence internal corporate behaviour, financing or reinvestment decisions even when they do not dras - tically reduce the consolidated effective rate. Under - standing these interactions will become increasingly For many years, Uruguay’s residence policy was built on a powerful combination of institutional stability, quality of life and the assurance that most foreign investment income would remain outside the domes - tic tax net. The tax holiday became one of the coun - try’s most visible and effective tools for attracting investors. The new framework does not eliminate that instrument, but it redefines its reach and conditions. Individuals who are already benefiting from a tax holi - day will continue to do so, and importantly, the protec - tion now explicitly extends to foreign capital gains that, for other residents, became taxable under personal income tax from 1 January 2026. In this respect, the legislation confirms a strong commitment to respect - ing expectations created under prior regimes. For those acquiring tax residence from 2026 onwards, a renewed version of the holiday is introduced. It will central for both investors and advisers. Individuals: a parallel transformation
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