Uruguay’s Ministry of Economy and Finance issues decree regulating law that modifies Uruguayan CIT source criteria

Local contact

EY Global

16 Dec 2022
Subject Tax Alert
Categories Corporate Tax
Jurisdictions Uruguay
  • The Ministry of Economy and Finance issued a decree regulating the law that modifies the traditional source criteria for Corporate Income Tax (CIT) to comply with European Union (EU) requirements. The decree will become effective for fiscal years beginning as of 1 January 2023.

On 14 December 2022, the Uruguayan President signed a regulatory decree for the changes included on law 20,095, which introduced certain changes to the traditional source criteria for CIT (see EY Global Tax Alerts, Uruguayan Government submits bill to Parliament to modify Uruguayan CIT source criteria, dated 12 October 2022 and Uruguay’s Government enacts law to modify Uruguayan CIT source criteria, dated 14 December 2022).

The main clarifications made regarding the law were that:

  • To be a qualified entity for each asset, the conditions should be met for the entire period that the taxpayer holds the respective asset.

  • Adequate human resources should be demonstrated to the tax office to be within Uruguayan territory.

  • For companies whose main activity is holding participations in other companies and in real estate, it would be presumed, unless otherwise demonstrated, that the human resource requirement is met if they have at least one Uruguayan tax resident director with the adequate qualifications to develop such position, or if most of its human resources employed are Uruguayan tax residents and are qualified to carry out the activities that generate the corresponding income.

  • To be considered a qualified entity, the conditions are deemed met even if the activity is developed through qualified human resources provided by third parties within Uruguayan territory, as long as there is adequate supervision and control by the taxpayer within Uruguay. If the third parties render services to multiple recipients, there should be no overlapping of the resources involved.

  • In all cases the tax return for demonstrating that the taxpayer is a qualified entity should include the information related to the human resources employed, including third parties hired.

  • A company would be considered to have as its main activity the acquisition of and maintaining of participations in other companies or real estate when the assets directly associated with those activities represent at least 75% of the total assets of the company.

  • Banks would not be subject to demonstrating that they are a qualified entity.

  • Regarding qualified income, in addition to filing a tax return, taxpayers would have to unfailingly prove the pertinence of expenses and costs incurred for the development of the assets involved, through its documentation and registry, to ensure traceability and control.

  • Regarding the anti-abuse clause, the commercial reasons will be considered to include the financial ones. Moreover, the mechanisms or ways that were adopted in compliance with regulations issued by public agencies will not be considered improper.

  • For the tax credit, in addition to having to prove the payment made abroad to the tax office, if there is any reassessment that should be done due to analogue taxes paid abroad, they should be performed within the fiscal year in which they are paid or credited. Like the law, the decree will become effective for fiscal years starting as of 1 January 2023.


For additional information with respect to this Alert, please contact the following:

EY Uruguay, Montevideo
  • Martha Roca
  • María Inés Eibe
  • Lucia Giagnacovo
  • Piero de los Santos
Ernst & Young LLP (United States), Latin American Business Center, New York
  • Lucas Moreno
  • Ana Mingramm
  • Pablo Wejcman
  • Enrique Perez Grovas
Ernst & Young LLP (United Kingdom), Latin American Business Center, London
  • Lourdes Libreros
Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific
  • Raul Moreno, Tokyo
  • Luis Coronado, Singapore

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.