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October 12, 2022

Uruguayan Government submits bill to Parliament to modify Uruguayan CIT source criteria

  • Uruguay's Executive has submitted to Parliament for discussion a bill that would modify the traditional source criteria for Corporate Income Tax (CIT) purposes in order to comply with European Union (EU) requirements.

On 6 October 2022, a bill that would modify the Uruguayan CIT source criteria in order to comply with EU requirements has been submitted to Parliament for discussion.

In July of 2022, a draft bill was published for public discussion detailing the substance requirements that should be met by CIT taxpayers that form part of a multinational group in order to maintain the traditional source criteria with regard to passive income from abroad. See EY Global Tax Alert, Uruguay intends to change its traditional source criteria for corporate income tax purposes to comply with EU requirements, dated 4 August 2022 for further details.

The main conditions were retained in the bill submitted to Parliament. However, the following are the key changes that were included in the revised draft:

  • All other increases on capital derived by assets that could potentially generate passive income from abroad would be in scope of the projected legislation.
  • The current exemption for dividends would not be applicable for dividends different than those paid by a local CIT taxpayer.
  • Dividends originated on income subject to CIT as a result of the projected legislation, paid to Personal Income Tax taxpayers, would be taxed at a 7% rate.
  • A tax credit would be created for the income included in the bill when such income is subject to income tax abroad.

The bill now has to get approval from both Chambers and then be enacted by the President and published in the Official Gazette.

Its provisions are expected to enter into force for fiscal years starting from 1 January 2023.


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