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March 16, 2023
Uruguay´s President announces tax reductions that would alleviate some tax burdens for individual taxpayers and small to medium-sized companies
On 2 March 2023, Uruguayan President Lacalle Pou proposed tax reductions to Personal Income Tax (PIT) and Social Security Assistant Tax (IASS) through a Bill to Congress and benefits for micro and small companies through ministerial Decrees.
The tax measures introduced by the Bill for PIT include:
The deductible amount is calculated by applying a proportional rate to the deductions allowed, depending on the employee’s nominal annual income. If the nominal annual income is less than or equal to 180 BPC (US$26,000), the rate would now increase from 10% to 14%.
The Bill also proposes to increase the annual minimum nontaxable IASS amount from 96 BPC (US$14,000) to 108 BPC (US$15,600).
The tax measures introduced by Decree include:
Effect of Decrees and Bill
The Decrees’ measures will become effective for fiscal years starting as of 1 January 2023. They were published in the Official Gazette on 3 March 2023 and 14 March 2023 respectively and can be accessed here: Decree No 66/023, Decree No 67/023 and Decree No 71/023 (in Spanish only).
The Bill was submitted to Parliament for discussion on 2 March 2023 and must be approved by both Chambers to move forward. If the Bill is approved, the Executive Branch would sign-off and proceed to publication. It can be accessed here (in Spanish only).
For additional information with respect to this Alert, please contact the following:
EY Uruguay, Montevideo
Ernst & Young LLP (United States), Latin American Business Center, New York
Ernst & Young LLP (United Kingdom), Latin American Business Center, London
Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific