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On 5 September 2018, Uruguay and Chile signed the Income and Capital Tax Treaty to eliminate doble taxation between both countries, issued by the Law 19,548.
On 6 February 2023, the Uruguayan Tax Administration informed that the rate at which interest can be taxed under the Double Tax Treaty (the Treaty) was modified due to application of the Most Favored Nation (MFN) clause in the Double Tax Treaty Protocol. As a result of the MFN clause, the interest rate is reduced from 15% to 10% of the gross amount of interest.
It is important to note that under Uruguay’s domestic regulation, Uruguayan companies paying interest to Chilean companies had to withhold at 12% and not the maximum rate of 15% under the Treaty. This 12% will now be capped at 10%.
This change was published on the website of the Uruguayan Tax Authority and entered into force on 1 January 2023. It can be accessed here.
For additional information with respect to this Alert, please contact the following:
EY Uruguay, Montevideo
Martha Roca
María Inés Eibe
Piero de los Santos
Lucia Giagnacovo
Catalina Fernández
Ernst & Young LLP (United States), Latin American Business Center, New York
Lucas Moreno
Ana Mingramm
Pablo Wejcman
Enrique Perez Grovas
Ernst & Young LLP (United Kingdom), Latin American Business Center, London
- Lourdes Libreros
Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific
Raul Moreno, Tokyo
- Luis Coronado, Singapore
For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.
