I have been reviewing Uruguay’s recent Five-Year Budget Bill (2025-2029) and believe this is a pivotal moment for those in Chile who have structures, investments, or tax residency linked to that country. Although the bill has not yet been approved, its direction is very clear — and it pays not to fall behind.

WHAT IS CHANGING AND WHAT YOU SHOULD WATCH

A) Banking secrecy and transparency.

The bill proposes that the Dirección General Impositiva (DGI) be allowed to request financial data from entities previously shielded by banking secrecy, with less judicial intermediation.

ADVICE: In structures with Uruguayan bank accounts, the opacity “buffer” is shrinking: higher risk, greater substance requirements.

B) Source rules on foreign capital gains.

When shares in non-resident entities holding Uruguayan assets are sold, under certain conditions (>50% Uruguayan assets and >USD 5M approx.) the gain is treated as Uruguayan-source income.

IMPACT: If you hold offshore vehicles that own real estate or assets in Uruguay, the exit (sale) may trigger Uruguayan taxation — even if it looks like it’s “outside.”

C) Regime for new tax residents.

Those who obtain residency from January 1, 2026 will face investment conditions — a minimum investment in real estate or funds — and then tax options (reduced rate or fixed annual amount).

IMPACT: If you are considering relocating your tax residency to Uruguay, this could be the moment.

D) Expansion of IRPF to foreign capital income.

The bill seeks to tax income and capital gains from assets held outside Uruguay, as well as profits from offshore entities (direct attribution).

MAJOR CHANGE: If you are a Uruguayan tax resident or considering becoming one, it will no longer be enough for assets to be “outside” to remain untaxed in Uruguay.

E) Dividends abroad — 7% withholding.

Until now, Uruguay’s Non-Resident Income Tax only taxed dividends if the company had paid IRAE. The bill extends the 7% withholding to more scenarios.

IMPACT: Cash flows you assumed were “clean” may now face Uruguayan withholding. For Chileans, the Chile-Uruguay treaty still provides a “cushion,” but the cash-flow dynamics change.

MESSAGE FOR THOSE WITH INVESTMENTS OR RESIDENCY IN URUGUAY

If you have — or are considering — tax residency in Uruguay, corporate or fiduciary structures with Uruguayan assets, real estate investments there, or dividend flows between Chile and Uruguay… then now is the time to analyze. I am not saying “move today or shut everything down,” but rather “review, model, decide before it is approved.” Because what was once relatively “predictable” is now entering a new regime.

A PIECE OF ADVICE THAT APPLIES HERE: more substance, better documentation, less discretion.

#taxation #wealthstructuring #internationaltax #assetprotection LegalKap / Algo Law Firm