At a key moment of parliamentary debate and budgetary review, the Uruguayan government seeks to reshape its tax system with a dual objective: to boost state revenue without affecting middle- and lower-income sectors, and to maintain the country’s appeal to foreign investors. The reform, which combines selective incentives with new tax burdens, aims to reinforce Uruguay’s position as one of the most stable and reliable destinations in Latin America.
Recognized for its strong institutions, legal security, and economic predictability, Uruguay now seeks to consolidate its international reputation through a more balanced fiscal framework. The initiative, led by the Ministry of Economy and Finance, aims to harmonize two goals that often come into conflict: tax pressure and fiscal competitiveness. This reform represents a pivotal evolution of fiscal policy in Uruguay, reflecting a strategy designed to preserve stability while modernizing revenue structures.
Continuity as a Defining Feature
One of the pillars of the government’s strategy is to preserve the continuity of its fiscal and investment policies, a hallmark that has distinguished Uruguay from its neighbors. Stability remains the country’s main asset in a volatile regional context. In this regard, the Executive does not plan to alter the rules for obtaining tax residency for foreigners, but rather to adjust the conditions of the tax exemption or “tax holiday” regime, particularly for large investment cases.
Up to now, foreign individuals who chose to establish tax residency in Uruguay could access tax benefits for a period of ten years, provided they met specific requirements related to physical presence (183 days or more per year) or investment. The new proposal maintains these foundations but tightens the conditions for those opting for the investment regime by raising the minimum required level of economic contribution and establishing a renewal system conditioned on the reinvestment of capital.
This adjustment seeks to ensure that fiscal benefits translate into a real impact on the national economy, preventing Uruguay from being perceived merely as a tax haven. Specifically, current beneficiaries of the tax holiday may extend their exemption for up to twenty years, provided they meet additional commitments in productive investment, innovation, or job creation. This reflects a pragmatic approach within fiscal policy in Uruguay, aimed at combining competitiveness with responsible economic stewardship.
A Strategy to Attract Capital and Talent
The Ministry of Economy believes that this new approach could energize key sectors such as real estate, technology startups, venture capital, and international financial services. The goal is to attract high-net-worth individuals who not only reside in Uruguay but also invest and participate actively in its development.
During the pandemic, Uruguay witnessed a notable influx of high-wealth residents from neighboring countries and Europe, many of whom were drawn by its health stability, social order, and tax regime. Authorities acknowledge that this phenomenon had a multiplier effect on the economy: it boosted demand in the real estate sector, strengthened investment in local projects, and stimulated consumption in luxury goods and specialized services.
With the new reform, the country aims to maintain this trend under a more demanding and sustainable framework. “Uruguay can consolidate itself as a regional hub for innovation and capital, combining quality of life, legal certainty, and a competitive tax system,” sources from the Ministry highlight. The integration of these goals demonstrates how fiscal policy in Uruguay serves as a strategic tool for promoting long-term investment and economic resilience.
Balancing Revenue and Attractiveness
One of the most sensitive aspects of the reform lies in increasing tax revenue without discouraging investment. In this regard, the Executive projects an additional income of about USD 600 million annually, thanks to a series of tax changes ranging from the taxation of foreign income to the adoption of international standards.
Among the most significant measures is the implementation of the global minimum tax on multinationals, aligned with the agreements of the Organisation for Economic Co-operation and Development (OECD). This tax, which will apply to large corporations operating in the country, could contribute between USD 350 million and USD 400 million annually to public finances. Although it implies a higher tax burden for companies, Uruguay’s framework would remain more favorable than that of other countries, thereby preserving the nation’s relative competitiveness in the region.
Another notable change focuses on taxing capital gains generated abroad, particularly those derived from the sale of shares or holdings in non-resident companies. Until now, such gains were not subject to taxation, creating a gap in terms of fiscal fairness. With the new legislation, the government expects to collect around USD 55 million annually from this measure, while also closing potential avenues for tax evasion and aggressive fiscal planning. These measures underscore how fiscal policy in Uruguay is evolving toward greater equity and global integration.
Debate Over Banking Secrecy
The most controversial component of the project concerns banking secrecy. The government seeks to allow the General Tax Directorate (DGI) direct access to financial information without requiring judicial authorization, a measure that would strengthen oversight and the fight against tax evasion. However, this proposal faces political resistance in Parliament and from some business sectors, who fear it could undermine confidence in Uruguay’s financial system.
The lack of a legislative majority could prompt the Executive to postpone this initiative to prioritize other elements of the fiscal package, though the debate remains ongoing. In any case, the global trend points toward greater financial transparency, consistent with international standards for the automatic exchange of tax information.
Changes to the Personal Income Tax (IRPF) and the Non-Resident Income Tax (IRNR) are geared toward a more comprehensive model, with an expanded tax base that includes foreign income. This marks a step toward a partially global taxation system in which Uruguayan residents with income abroad also contribute to national revenue.
Although the measure may generate resistance among some taxpayers, experts believe it strengthens the coherence of the fiscal system and reinforces its legitimacy in the eyes of the public by reducing perceptions of excessive privileges for specific sectors.
Beyond the technical adjustments, the reform is part of a long-term development strategy that seeks to position Uruguay as a destination for investment, residence, and talent. The Director of Free Zones and other divisions of the Ministry of Economy have emphasized that the goal is not limited to attracting financial capital but also to promoting innovation, creating qualified jobs, and fostering productive diversification.
The plan includes technological modernization of fiscal processes, the promotion of investment funds dedicated to innovation and audiovisual production, and the expansion of the creative economy, which has gained prominence in recent years. All of these initiatives are part of the five-year budget currently under discussion in Parliament, regarded as the cornerstone of the country’s economic policy for the coming years.
Uruguay’s tax reform combines revenue-enhancing measures with selective investment incentives. While some analysts interpret it as an effort to increase the tax burden on the most privileged sectors, others view it as an opportunity to consolidate a fairer and more competitive model.
The main challenge will be ensuring that the country remains attractive to foreign capital while maintaining social equity and fiscal sustainability. Ultimately, Uruguay seeks to uphold its reputation for stability while taking a decisive step toward a more modern, inclusive, and globally aligned tax system. This comprehensive approach confirms that fiscal policy in Uruguay is becoming a central pillar in the nation’s long-term strategy to balance growth, equity, and international competitiveness.