Fiscal Transparency Law comes into effect in Uruguay

Uruguay has established new rules through Law 19.484, with the aim of converging with international standards of International Tax Transparency, Prevention of Money Laundering and Terrorism Financing. Our local expert offers a summary.

On January 5, 2017, the Legislative Branch of Uruguay established new rules through Law 19.484 or Law on International Tax Transparency and Identification of the Final Beneficiary, with the aim of aligning the local rules with the international standards of International Tax Transparency, Prevention of Money Laundering and Terrorism Financing.

The law is divided into four chapters:

Chapter I. The obligation to automatically provide information of balances and income of financial origin to the Tax Administration (DGI).

Chapter II. The identification of the Final Beneficiary and the Nominee Holders.

Chapter III. The determination of new norms and tax rates applicable to Entities Residing in Countries or Jurisdictions of Low or Null Taxation (BONT) or benefiting from a special BONT regime.

Chapter IV. Adjustments to the regime of Prices of Transfer of Income Tax from Economic Activities.

In force since 1 January 2017, and promulgated on 5 January, the law also establishes the deadlines to comply with different regulations, as indicated below.

  • Information on balances and income of financial origin at the end of the calendar year.
  • Final Beneficiary Communication - September 30, 2017 and 30 or 90 days for later modifications depending on whether they are residents or non-residents.
  • Registration of shareholders of companies issuing registered securities - June 30, 2018 and 30 or 90 days for later changes depending on whether they are residents or non-residents.

Additionally, the tax burden increased to discourage the use of entities resident in countries or jurisdictions or entities that benefit from a special BONT regime. In contrast, a special regime is in place until June 30, 2017 for the exemption of the Income Tax of Non-Residents (IRNR) and the Property Transfer Tax (ITP), and a fast-track procedure for such entities to adopt the statutes of Public Limited Companies as regulated by Law 16.060.

These normative changes occur not only within the framework of international requirements for combating terrorism financing, money laundering and fiscal transparency, but with the intention of maintaining and so improving Uruguay's position at the regional level in the international rates of transparency. The country currently ranks third in the Americas (behind Canada and the United States) and the 21st worldwide in the Transparency International rate.

Companies must take action

The Law on International Tax Transparency and Identification of the Final Beneficiary affects financial entities as informants, and all resident and non-resident entities operating in Uruguay. These entities must provide information on their final beneficiaries and shareholders.

Although some companies are concerned about the security and confidentiality of the information, it is important to keep in mind that it will be secret and accessible only to the DGI, the National Anti-Money Laundering Secretariat and Financing of Terrorism and the Financial Analysis and Information Unit of the BCU, the Board of Transparency and Public Ethics and by the Criminal Justice or competent Justice body when there are resolutions based on cases of alimony obligation.

Companies that do not comply with Law 19.484 face major penalty sanctions. Visit the official page of Law 19484 of January 5, 2017 for details on the sanctions.

Get expert help

Our experts in Corporate Secretarial services can assist companies with communicating the final beneficiaries and shareholders to the Central Bank of Uruguay.

Furthermore, we can assist in the process of carrying out the necessary procedures for non-resident entities that choose to adapt their bylaws to those of the Public Limited Companies, as regulated by Law 16.060.

Contact our team of experts in Uruguay for more information.

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