Uruguay: Income tax proposals in draft budget bill 2025-2029

The draft National Budget Law for 2025-2029, which was submitted to parliament on August 31, 2025, includes the following proposed tax measures:

• Expanded of scope of individual (personal) income tax on foreign capital income:
  • Foreign capital income subject to individual income tax (impuesto a la renta de las personas físicas (IRPF)) would include leases or similar transactions involving real estate.
  • Capital gains from sales of shares, equity interests, debt securities, and real estate abroad would also be subject to IRPF.
• Foreign-source income attribution subject to IRPF:
  • Foreign-source income subject to IRPF, channeled through nonresident or resident entities, would be attributed to final beneficiaries residing in Uruguay in proportion to their participation.
  • Income would be considered accrued when received by the first entity in the chain.
  • Taxes paid abroad may be credited.
• Adjustment to the “Tax Holiday” regime:
  • Individuals acquiring tax residency in Uruguay from January 1, 2026, could opt to pay nonresident income tax (impuesto a la renta de los no residentes (IRNR)) on certain foreign income during the year of residency change and the following 10 fiscal years.
  • If approved, they would pay IRPF at half the rate for five additional years, provided investments are made in Uruguay and they were not tax residents in the previous two years.
  • The benefit excludes individuals who previously used the regime, except for certain exceptions.
• Expansion of IRNR scope for dividends and profits:
  • Dividends and profits would be subject to IRNR if taxed in the beneficiary’s jurisdiction and a tax credit is granted for taxes paid in Uruguay, even if they do not meet the current condition of net taxable income subject to IRAE.
• Expanded scope of income tax on economic activities, individual income tax, and nonresident income tax:
  • Income derived from the transfer of shares or interests in nonresident entities would be taxed if the entities have significant assets in Uruguay.
  • Significant assets are defined as:
    • More than 50% of their assets located in Uruguay, or
    • Assets exceeding UI 31.5 million (approximately US$5 million).
• New annual tax for multinational groups*:
  • Uruguayan entities in multinational groups with consolidated revenues of at least €750 million in two of the four previous fiscal years would be subject to a new tax.
  • The tax would apply if the effective tax rate in Uruguay is less than 15%, including entities operating in free zones.

Read a September 2025 report (Spanish) prepared by the KPMG member firm in Uruguay

• Proposed changes to international purchase regime—read TaxNewsFlash
• Proposed changes to tax transparency measures—read TaxNewsFlash

* Read TaxNewsFlash