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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

  • Uruguayan President Luis Lacalle Pou announced upcoming tax reductions that include modifications to Personal Income Tax (PIT) and Social Security Assistant Tax (IASS), as well as other benefits for micro and small 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.

Bill highlights

The tax measures introduced by the Bill for PIT include:

  • A dependent-minor-child deduction that would increase from 13 Base Benefit and Contributions (BPCs) (US$ 1,900) to 20 BPC (US$ 2,900) per year, per child
  • A tax credit increase from 6% to 8% for rental payments made for permanent housing (applies to PIT and IASS)
  • A higher cap on the cost of permanent housing for purposes of the mortgage credit deduction, increased from US$ 109,000 to US$ 137,500, but maintaining the maximum annual deduction limit at 36 BPC (US$ 5,200)

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).

Decree highlights

The tax measures introduced by Decree include:

  • Modifying percentages applicable to the corporate income tax (CIT) notional regime and how to apply them, for income obtained from a combination of capital and labor, according to the following scale (applicable to sales, services and other gross income obtained in the fiscal year):

More than indexed unit (IU)

Up to IU











 Above 3,000,000


  • Adding an income-band range for calculating minimum monthly advanced CIT payments; now, companies with gross income that did not exceed 305.000 IU by more than one and a half times (US$ 66,450)in the previous fiscal year, will be required to pay monthly advanced payments of US$ 150 approximately instead of US$ 170
  • Modifications to the "Small Business" regime for companies with gross income that does not exceed 305,000 IU (US$44,300); previously, a company that exceeded this limit would be taxed under the general regime (CIT and VAT) for at least two years; the bill eliminates the two-year condition
  • Increasing the annual income limit for small companies in the agricultural sector that choose to pay tax on the Disposal of Agricultural Goods (IMEBA) instead of on CIT; currently, annual income limit for opting into IMEBA is any amount less than 2 million UI (US$ 290,000); the new limit will be 2.5 million UI (US$ 360,000)

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