Adopting the Global Minimum Tax (GMT) represents a milestone in international taxation to ensure that multinationals are taxed at least 15% of their profits in each jurisdiction where they operate. This agreement, supported by more than 130 OECD and G20 countries, aims to combat tax evasion and aggressive optimization practices.
Effects of the GMT on the Uruguayan Tax Model
Uruguay has been recognized for its competitive tax model, with incentives such as free trade zones and the Commission for the Application of the Investment Law (Comap) regime. These mechanisms have been crucial to attract foreign investment and promote strategic sectors. Conversely, implementing the GMT could affect the efficiency of these incentives, given that multinationals would be required to supplement their taxation up to 15% overall, thus reducing the competitive advantage offered by the country.
Challenges for Uruguay in the New Tax Environment
- Review of tax incentives: Uruguay will have to evaluate and possibly reformulate its preferential tax regimes to align them with the new international regulations, ensuring they remain attractive for investment but do not infringe on the GMT.
- Regional competitiveness: Loss of effectiveness of tax incentives could lead multinationals to consider other jurisdictions with more favorable policies, affecting Uruguay’s position in the region.
- Transparency and international reputation: Adapting to the GMT offers Uruguay the opportunity to strengthen its image regarding tax transparency, which could attract investments committed to social responsibility and sustainability.
Opportunities for Uruguay in the New Tax Context
- Diversification of incentives: Beyond tax benefits, Uruguay can focus on promoting investments in sectors such as innovation, technology, and renewable energy, offering non-tax incentives that remain attractive.
- Institutional strengthening: Uruguay’s strong institutional structure and political stability can be decisive factors for investors seeking legal certainty and a business-friendly environment.
- Regional leadership in transparency: Uruguay can position itself as a regional leader in transparency and good tax practices by adopting and complying with new international regulations, attracting companies that appreciate these aspects.
Conclusion
Implementing the GMT raises significant challenges for Uruguayan taxation, particularly its traditional tax incentives. Conversely, it also has opportunities to redesign its investment attraction strategy, focusing on transparency, diversification of incentives, and institutional strengthening. Uruguay must become proactive and strategic in adapting to this new global tax landscape, ensuring its competitiveness and long-term economic sustainability.
Source: Cronicas