Legislative modification project in Uruguay

Taxability of certain foreign income obtained by corporations without substance.

The Executive Branch of Uruguay (EP) released the bill introducing new provisions in the Income Tax on Economic Activities (IRAE) to comply with the commitment assumed with the European Union (EU) and to adjust some aspects that could be considered potentially harmful and encourage unfair tax competition.

The proposed adjustments only affect companies that are part of a Multinational Group. Income derived from intellectual property, as long as it is not qualified income, and other passive income in general, as long as it is obtained by a non-qualified entity, are introduced as new hypotheses of Uruguayan source income.