Uruguay's international tax framework has historically evolved through gradual adjustments rather than structural disruptions. This approach has allowed the country to incorporate international standards while preserving legal certainty, institutional stability, and investor confidence.
The Budget Law approved in late 2025, effective as of 1st January 2026, should be understood with this trajectory. However, the nature of the current challenge differs from previous phases of reform. While earlier developments focused on transparency and exchange of information, the current international agenda emphasises effective taxation and the allocation of taxing rights.
The emergence of the OECD/G20 Pillar Two framework, establishing a 15% global minimum tax, reflects a shift from visibility to outcomes. For jurisdictions such as Uruguay, which historically relied on targeted incentives as part of their competitiveness strategy, this development introduces structural tensions.
Uruguay's response has been the introduction of a domestic minimum complementary tax (impuesto minimo complementario doméstico - IMCD). Under this regime, where multinational groups with consolidated revenues exceeding EUR750 million are subject to an effective tax rate below 15%, the corresponding top-up tax is collected locally rather than by another jurisdiction. The measure preserves taxing rights linked to domestic economic activity and aligns Uruguay with the emerging international consensus.
A central concern arising from the IMCD was its interaction with pre-existing fiscal stability regimes. The regulatory framework addresses this issue by allowing partial or total relief where the complementary tax imposed in Uruguay exceeds the amount that would have been collected abroad under the inclusive Framework rules. Reimbursement mechanisms are also contemplated.
At the same time, access to these protections requires formal procedures and the authorisation of international information exchange. The solution reflects a characteristic feature of Uruguay's approach: compliance with international standards while preserving previously granted guarantees.
The IMCD incorporates carve-outs linked to payroll and tangible assets, thereby recognising the relevance of substantive economic activity. This element is consistent with Uruguay's longstanding preference for promoting real investment rather than purely formal structures.
In this context, tax incentives are not eliminated but redefined. Their impact must now be assessed not only at the local level but also in light of their effect on the group's global effective tax rate. As a result, their role shifts from direct tax reduction to influencing broader business decisions, including financing and reinvestment.
The reform also introduces significant changes in the taxation of individuals. Existing tax holiday regimes are preserved, including their extension to certain categories of foreign-source capital gains. For new tax residents, a renewed holiday regime applies for the year of acquisition of residence and the following ten fiscal years, generally subject to investment conditions.
Following the expiration of such regimes, taxpayers may opt for transitional alternatives, including reduced rates on foreign capital income or fixed annual taxation, depending on the circumstances.
Additionally, the scope of personal income taxation is broadened to include foreign capital gains, income from foreign real estate, and attribution rules applicable to certain structures. These measures reflect a gradual expansion of the tax base, aligned with international trends.
The reforms effective as of 2026 do not represent a departure from Uruguay's historical model, but rather its adaptation to a new global environment. The introduction of the IMCD, the treatment of fiscal stability regimes, and the recalibration of individual taxation illustrate predictability and credibility.
In this context, the interaction between domestic rules and global frameworks becomes central for both taxpayers and advisers. Uruguay's strategy continues to rely on a balance between competitiveness and compliance, with adaptation serving as a mechanism of continuity rather than disruption.
FBM Advisory is a boutique firm dedicated to developing cutting-edge solutions tailored to all the individuals and companies that choose it. With more than 15 years of experience at national and international level, the firm has been recognised by several international directories as one of the top references in tax matters. Through the close, personalised attention, proactiveness, dedication, and commitment to confidentiality with which the firm approaches each case, it is committed to establishing a solid alliance with clients that allows them to take their projects and businesses to the next level. The team of professionals, trained locally and abroad, stands out for its technical rigour of it professionals, as well as for the creativity and flexibility with which it adapts and responds to a world that is constantly changing and posing new challenges.
Fabian Birnbaum is a public accountant with a Master of Laws (LLM) from the London School of Economics and a Master of Taxes from ORT University. He has more than 20 years of experience in local and international advice and has handled national and multinational clients in the services, commercial, industrial, financial, and agricultural sectors, among others. He is the professor of taxes teaching on the Master of Taxes programme at ORT University. He is a member of the International Fiscal Association, the Uruguayan Institute of Tax Studies, and the Uruguayan Association of Accountants, Economists, and Administrators.
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