Impact in Uruguay: the mere idea of ​​a tax on deposits abroad is classified as “tax Kirchnerism”

By Brittany Solano

The possible establishment of a tax on income obtained abroad by Uruguayan residents has ignited an intense debate in the political arena and in the financial sector. The measure, being studied to be included in the next Budget Bill, could reach an estimated capital of 62,000 million dollars, according to official data.

A change in the scope of personal income tax

The proposal seeks to modify the current structure of the Personal Income Tax (IRPF), which since the 2007 tax reform excludes capital gains generated outside the country by residents. The objective would be to expand its scope and include these incomes within the tax base, with rapid parliamentary treatment when integrated into the Budget.

The economic team maintains that it is not about creating a new tax, but about perfecting and expanding existing ones. The use of the proceeds could be directed towards financing policies for early childhood, considered a priority by the government.

Positions for and against

From social and union sectors, the measure is seen as an opportunity to increase the progressivity of the tax system, especially within the framework of proposals that aim for higher-income sectors to contribute more.

On the contrary, political and business leaders warn that a tax of this type could affect investor confidence, discourage the arrival of capital and modify the image of Uruguay as a stable country in tax matters. They also point out that it could generate negative effects in areas with a high concentration of investments, such as Maldonado.

Increased capital abroad

Figures from the Ministry of Economy and Finance indicate that the assets and capital of Uruguayan residents abroad amounted to 62,000 million dollars in 2023, equivalent to almost 79% of the Gross Domestic Product. The growth has been significant when compared to the 27,171 million registered in 2019.

Other measures under study

The government is also analyzing complementary initiatives, such as taxes on digital purchases abroad and the adaptation of national regulations to the Global Minimum Tax promoted by the OECD, which would affect multinationals with operations in Uruguay.

Next steps in the discussion

The debate will remain in the foreground until the presentation of the Budget Bill. Meanwhile, meetings are planned between the economic team, legislators and actors in the financial system to evaluate the scope of the measure and its eventual impacts.