VAT Temu: New tax approved for purchases abroad
With the support of the Broad Front and the two representatives from the Cabildo Abierto (Open Council), the Chamber of Deputies approved the tax chapter of the budget bill, which includes the creation of the Temu VAT and a global minimum tax for multinationals. The vote was resolved with 50 affirmative votes, while the National Party, the Colorado Party, and the representative from the Independent Party voted against.
The new Temu VAT aims to tax retail purchases made abroad under the duty-free regime, a system that allows citizens to purchase products outside the country tax-free, up to a certain annual amount. With this modification, the limit is raised from $600 to $800 per year, divided into up to three purchases, although it can also be used in a single transaction. This measure seeks to respond to a growing phenomenon: the use of foreign platforms like Temu, a Chinese-based platform that offers products at low prices and without tax.
The tax will not apply to purchases made in the United States, due to the current trade agreement between the two countries. This exception was highlighted by several legislators as a way to preserve international commitments without affecting the tax's primary purpose.
How does the Temu VAT impact the current franchise regime?
The initiative arose in response to complaints from Uruguayan merchants, who have seen a drop in sales due to the exponential growth of digital purchases on foreign platforms. According to industry representatives, unfair competition generated by tax-exempt products has affected the profitability of many local businesses, especially in sectors such as clothing, technology, and household goods.
The ruling party argued that the Temu VAT seeks to level the commercial playing field by protecting Uruguayan businesses from the expansion of digital platforms operating from abroad. "This is not about curbing consumption, but rather creating fairer conditions for those who pay taxes and create in the country," stated legislators from the Frente Amplio during the session. It was also emphasized that the new tax will not affect those who make occasional purchases, but rather aims to regulate a consumption volume that has grown steadily in recent years.
For its part, the opposition questioned the increase in the amount allowed under the franchise, warning that it could facilitate the entry of more expensive products that were previously not purchased through that means. "It opens the door to bringing in higher-value items, which could exacerbate the negative impact on local commerce," said a National Party representative . Furthermore, it was suggested that the new Temu VAT could generate confusion among consumers, especially regarding the application criteria and current exceptions.
In addition to the VAT, the implementation of a global minimum tax of 15% was approved for multinational companies with subsidiaries in Uruguay that have an annual turnover of more than $750 million. The proposal establishes that these companies will pay taxes in the country, rather than solely at their headquarters. The objective is to prevent large corporations from operating in Uruguay without contributing proportionally to the national tax system, in line with international agreements promoted by the OECD.
The opposition was also critical of this point, arguing that it could discourage foreign investment. "Uruguay needs to attract capital, not scare it away with taxes that don't exist in other countries in the region," said spokespersons for the Colorado Party. In this regard, they warned that the global minimum tax could have an adverse effect on strategic sectors such as technology, logistics, and financial services.
The Open Council, which supported both articles, conditioned its vote on the inclusion of budget reallocations to increase Armed Forces salaries and allocate more funds to military healthcare. This negotiation was key to unblocking the tax chapter of the budget, which had generated tensions in the preceding weeks.
The parliamentary debate will continue this Saturday, with analysis of the chapters pertaining to the Presidency of the Republic and the Ministry of the Interior . The debate is expected to remain focused on sensitive issues such as security, public spending, and social policies, in a context marked by the need to settle accounts without affecting essential services.
Local commerce and foreign platforms: the role of VAT Temu
Meanwhile, local merchants remain vigilant about the Temu VAT regulations, which could lead to a significant shift in consumer behavior. “This increase represents a respite for many families struggling to make ends meet, but we also need clear rules to compete on a level playing field,” said a textile industry representative. In neighborhoods such as Centro, La Unión, and Paso Molino, several merchants noted that the impact of digital purchases has been felt strongly, especially on key dates like Mother's Day and the end-of-year holidays.
The implementation of the VAT will be monitored by the General Tax Directorate, which will establish control and oversight mechanisms. An information campaign is also planned to help consumers understand the scope of the new tax and its practical implications.
Official sources indicated that the goal is not to collect taxes at any cost, but rather to create a fairer framework for domestic trade. In this regard, the Temu VAT is expected to contribute to strengthening tax collection without affecting the pockets of those who make reasonable purchases abroad.
