The following was sent to me by a local attorney. I am not sure whether the information is correct of not. I am still in “watch and see” mode, but I hope he is correct.
Unfortunately, much of what the press articles and blogs have been saying is 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. A different, adjusted draft, was finally prepared. And that draft is still a work in progress, and is being adjusted in the Senate´s committee. 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: On May 28th, the Ministry of Finance, where the bill proposal is being discussed, issued an official statement clarifying one issue of the proposed bill: that 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 or double taxed.
- The likelihood is that on income tax the tax will be circumscribed to Uruguayan citizens, and the government is considering adjusting the text of the bill, possibly to grant tax credits, so no one is taxed twice.
- And remember, it would only be on some types of income: interest on deposits and dividends. So, any other type: salary, capital gains on sale of shares or property, pensions, lease, income, etc. are all excluded.
Even if he is correct, I still think the proposed law is a bad idea and another step down the slippery slope…
Apparently the sky is falling. You don’t understand THE SKY IS FALLING!!!!!
What ever shall we do???
Left by Fuzzybill on June 21st, 2010
Yes I agree, it´s a bad idea! I hope it won´t come through because if it does we will probably see many people leaving.
Left by Karin on June 21st, 2010