July 14, 2023
Uruguay’s Executive Power submits accountability bill with tax provisions to Parliament
On 30 June 2023, the Executive Power submitted the accountability bill to the Parliament for discussion. The bill includes several tax measures, which are proposed to be effective beginning 1 January 2024.
This Alert outlines the main tax proposals in the bill.
Mergers and spin-offs
Article 18ter, Decree No.150/007 permits companies that decide to merge or spin off as a result of a group restructuring to refrain from computing goodwill on the transaction for tax purposes, provided certain conditions are met. The bill proposes to codify this decree, with the following additions:
Transfer of capital participations
The bill would not apply corporate income tax to the transfer of participations in Uruguayan tax resident entities, provided certain conditions were met (e.g., targeting group restructuring operations). One of these conditions would require the acquirer as well as the transferor to be Uruguayan tax resident entities. Additionally, these operations would not be considered on the VAT assessment.
Yields of capital and capital gains from investment fund management companies
The bill would exempt income from corporate income tax, personal income tax or nonresident income tax, as applicable, provided the income arises from investments in public or private securities that are (1) issued under public subscription, (2) traded on the Uruguayan stock exchange and (3) instrumented on pro rata (unless excess demand results from a bid procedure).
The bill would apply a 0% rate to disposable goods and packages (i.e., glasses, plates, cutlery, straws, and other disposables), as long as the entity was affiliated with a national waste management plan and complied with certain conditions. This provision would apply for 10 years, beginning 1 January 2025.
The bill would also add the following to the list of tobacco products (i.e., tobacco, cigars and cigarettes taxed at a maximum rate of 70%) that are currently taxed under Section 9 of Title 11 (Law No. 18,083):
The bill now has to be approved by both chambers of Parliament, confirmed by the President and published in the Official Gazette.
The bill’s provisions are proposed to be effective from 1 January 2024, unless a specific provision indicates otherwise.
Published by NTD’s Tax Technical Knowledge Services group; Maureen Sanelli, legal editor