Uruguay: Budget proposals include Pillar Two minimum tax

Creation of a “domestic complementary minimum tax” aligned with the OECD’s proposed qualified domestic minimum top-up tax (QDMTT) 

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September 4, 2025

The National Budget Bill 2025–2029, submitted by the Executive Branch of Uruguay on August 31, 2025, includes the creation of a “domestic complementary minimum tax” (IMCD), aligned with the OECD’s proposed qualified domestic minimum top-up tax (QDMTT) under Pillar Two.

Background

Pillar Two of the OECD/G20 BEPS (Base Erosion and Profit Shifting) initiative aims to establish a global minimum tax rate of 15% for multinational groups with annual revenues exceeding €750 million. Its goal is to prevent base erosion and harmful tax competition between jurisdictions.

The GloBE (Global Anti-Base Erosion) Rules are the core of Pillar Two and are implemented through three mechanisms:

  • Income inclusion rule (IIR): Allows the parent company to tax profits of subsidiaries in low-tax jurisdictions
  • Undertaxed payments rule (UTPR): Enables other jurisdictions to collect residual taxes if the IIR is not applied
  • Qualified domestic minimum top-up tax (QDMTT): Allows each country to directly collect the difference to reach the 15% minimum

IMCD proposal

Uruguay proposes the IMCD as a QDMTT mechanism, complementary to the corporate income tax (IRAE) and the net worth tax. It would be triggered when the effective tax burden of a multinational group in Uruguay falls below 15%.

The IMCD would apply to local entities belonging to groups with annual revenues exceeding €750 million in at least two of the last four fiscal years. The tax would be configured annually and is expected to apply to fiscal years starting in 2025 (although this aspect is not clearly specified in the bill).

The effective rate would be calculated by dividing adjusted covered taxes by the admissible net income. If the result is below 15%, the IMCD would be applied to the excess, deducting exclusions for economic substance (payroll, tangible assets).

The IMCD amount includes a base component and an additional adjustment for technical corrections. Income related to economic substance is excluded, and a de minimis exclusion is considered for low materiality situations.

Impact on promotional regimes

The IMCD would affect regimes such as free zones, the software industry, and investments promoted by COMAP. Although exemptions remain, the actual benefit would be reduced due to the complementary tax.

Article 628 of the bill excludes the IMCD from free zone exemptions, raising concerns about potential liability for damages under Article 25 of Law 15.921, which guaranteed the maintenance of tax exemptions for companies operating under the free zone regime during the term of their contracts.

The implementation of the QDMTT in Uruguay through the IMCD represents a significant shift in fiscal policy, aligning the country with OECD international standards. The government estimates it could generate additional revenue between $350 and $500 million. However, its impact on the effectiveness of various investment promotion regimes is a concern for both the government and the private sector.

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