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Uruguay New Taxes Undermine Its Tax Haven Reputation Yesterday I wrote about foreigners making a new home in Uruguay and said: "A major plus: Uruguay is a tax haven that imposes no personal income or estate taxes and has one of the highest standards of living in Latin America. There is an annual wealth tax of up to 3% on capital owned and domiciled within the country." An alert reader emailed me with the latest news on taxes in Uruguay from the Montivideo office of PricewaterhouseCoopers and what he passed along certainly ends that nation's former status as a "tax haven." n July 1, 2007, a new major tax law took effect that reaffirms the principle that taxes there are imposed only on a territorial basis -- that is, the government taxes only income produced within, or brought into the country, not offshore income earned and retained elsewhere. That's important for foreign persons who may wish to live in Uruguay but hace assets and income elsewhere.
But
the new tax law does impose major taxes on all persons resident in Uruguay,
as follows: 2) imposition of a new statutory corporate income tax rate of from 30% to 25%, which for the first time is extended all legal entities of every kind and all businesses. 3) introduction of a withholding income tax on non-residents income as follows: a) all Uruguayan source income obtained by nonresidents is taxed at a 12% rate on a gross basis, with certain exceptions; b) dividends and profits remittances are subject to tax only if originated on a corporate income taxable income;
4)
a net wealth tax levied on all assets: a) legal entities that pay taxes can
use the current year's oayment of corporate income tax to reduce up to 50%
of the current year's wealth tax; b) Individuals continue to be subject to
this tax at progressive rates varying from 0.7% up to 2.75%, depending on
the taxable basis amount, and a gradual reduction is proposed limited to a
0.1% minimum flat rate.
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