Tax insight

Uruguay National Budget Bill of Law – projected international tax updates

Insight
5 minute read
November 21, 2025

What happened?

The Uruguayan Executive Branch on August 31, 2025, submitted to Congress the National Budget Bill of Law for the five-year period 2025–2029 (the Budget Bill), which includes several tax provisions that could have a relevant impact from an international tax perspective.

The law, if passed as proposed, would enter into force on January 1, 2026, except for provisions that expressly set a different effective date. This is the case of the Domestic Minimum Top Up Tax (DMTT), being effective as from the date in which the law is passed (expected to occur before December 31, 2025).

Why is it relevant? 

The Budget Bill proposes amendments to the taxation of Multinational Groups (MNGs), individuals, and in general those entities and individuals doing business and investing in Uruguay.

In addition to proposing a DMTT, the bill also includes other important tax amendments and benefits. From a corporate tax perspective, it proposes changes to the taxation of indirect transfers of Uruguayan assets (including Uruguayan entities) and to the income tax withholding on dividend/profit distributions. The Executive Branch would be empowered to grant tax credits to companies that carry out activities in Uruguay that contribute to economic development. These include companies that make significant investments, create direct or indirect employment, promote the development of new technologies, and favor Uruguay’s international integration through the scale of their operations. Authorizations to implement incentive mechanisms for domestic or foreign companies that develop audiovisual projects in Uruguay also are expected.

Actions to consider

The proposed implementation of a DMTT in Uruguay aligns the country with the OECD’s Pillar Two framework. This provision may affect MNGs operating in Uruguay, particularly those benefiting from tax incentives, by increasing their effective tax rate to meet the 15% global minimum threshold. It is important to closely monitor the legislative progress of the bill and assess its implications at a group level, from both domestic and international perspectives. US-headquartered multinational groups could potentially be exempt or excluded from Uruguayan DMTT if the US is excluded from the application of the Income Inclusion Rule (IIR) and Undertaxed Profits Rule (UTPR) by the Inclusive Framework (IF).

In light of the upcoming changes, taxpayers should consider a timely assessment of the group’s structure and operations in Uruguay. This assessment includes evaluating the potential application of safe harbor rules, substance-based exclusions, monitoring how the existing legal tax stability provisions (e.g., Free Trade Zones) would be reconciled with the DMTT, and other mitigating provisions.

Stakeholders are encouraged to proactively evaluate potential exposure under the proposed bill before year-end 2025, focusing on the new rules applicable to indirect transfers of Uruguayan assets and Non-Residents Income Tax (IRNR) implications on dividend distributions.