Uruguay has been recognized as a “cooperating jurisdiction without commitments” by the European Union (EU) after a series of taxation improvements, the South American country's Ministry of Economy and Finance (MEF) confirmed Tuesday.
The measure means an improvement from the previous qualification showing Uruguay as transparent and reliable before the international community, the MEF explained.
The EU's Economic and Financial Affairs Council (ECOFIN) issued a communiqué with the semi-annual updates to its list of countries that do not cooperate on fiscal matters and highlighted the regulatory modifications introduced by Uruguay, based on a series of recommendations made by the body in 2021.
This change in the rating highlights Uruguay's image in the international scenario, said MEF Director of Tax Advisory María Pía Biestro. This administration has demonstrated a willingness to cooperate on issues of good tax governance. The changes introduced, both at the legal and regulatory level, are premised on maintaining in general terms the principle of the source for corporate income, granting tax certainty, and protecting the interests of our country against the potential imposition of defensive measures that affect its economy and international image, she added.
The European Union began to evaluate the territorial taxation regime on corporate income applied by Uruguay as of the end of 2019, and in June 2021 sent the MEF a note in which it recognized compliance with internationally accepted standards.
With the new provisions of the Tax on Income from Economic Activities (IRAE), and the exemption of certain passive income obtained by member entities of multinational groups, provided that such income complies with the appropriate requirements of substance, Uruguay fulfilled its commitments to the European Union and thus consolidated its position as a cooperating jurisdiction.
Biestro pointed out that some changes which came into force in 2023 made this announcement possible.
Also on Tuesday, the EU included Russia, Costa Rica, the British Virgin Islands, and the Marshall Islands to its list of jurisdictions that do not cooperate in tax matters with the community block.