Today’s blog post is a guest post by Juan Fischer, the managing partner of Fischer & Schickendantz. Juan wrote the following post to help alleviate concerns about the proposed tax legislation in Uruguay.
Unfortunately, much of what the press articles and blogs have been saying is much more alarming than the reality. It has been said that Uruguay will tax:
- Its corporate vehicles’ offshore assets
- Foreign residents’ assets
- Foreign residents’ income
That is incorrect.
The problem was originated because a draft of a proposed change to a tax law was leaked several days ago.
That draft is still a work in progress. And the proposed change only aims to tax the money that Uruguayans have abroad, not foreigners who come to Uruguay.
Here’s the exact situation of where the issue stands on the three supposed taxes:
- Taxes on corporate vehicles’ offshore assets:
- Friday, May 28th, the Ministry of Finance, where the bill proposal is being discussed, issued an official statement clarifying one issue of the proposed bill:
- There will be no new taxes on Uruguayan companies, and that their offshore assets will not be taxed.
- Explicitly: that nothing will change for Uruguayan corporate vehicles. So, Uruguay remains an offshore tax free jurisdiction.
- Taxes on foreign residents’ assets:
- It has been made clear from the start that assets owned abroad by foreign residents in Uruguay will not be taxed at all. This was never in doubt.
- This is only for citizens (at a very small scale; and remember that this asset tax is gradually being phased out since 2007, and will disappear by 2017).
- Taxes on foreign residents’ income:
- Some types of income (not all) generated abroad could be taxed. But the aim of the law is to tax the money that Uruguayans have abroad, not foreigners who come to Uruguay.
- The Ministry of Finance issued a second statement on June 1st, clarifying that the law will in no way jeopardize the country’s policy of attracting foreigners to relocate in Uruguay. And that their income will not be taxed.
- The likelihood is that on income tax (on some types of income: interest on deposits and dividends) the tax will be circumscribed to Uruguayan citizens.
There you have it from an Uruguayan attorney… Please feel free to ask any questions in the comments below or to contact Juan directly here.