Uruguay Proposes Increased Tax Rates on Higher Incomes

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May 24—The income tax rate for all individuals with monthly incomes greater than 33,400 pesos ($1,067) and the social tax rate for those earning greater than 50,100 pesos ($1,600) per month is to increase Jan. 1, 2017, according to a proposed bill announced by Uruguayan Minister of Economy and Finance Danilo Astori May 23.

Tax thresholds and brackets for both income and social taxes would remain unchanged under the bill, according to the announcement.

Under the proposed income tax changes:

• All income up to 23,380 pesos ($746) per month would continue to be tax free;

• Income greater than 23,380 pesos and up to 33,400 pesos ($1067) per month would continue to be taxed at 10 percent;

• Income greater than 33,400 pesos and up to 50,100 pesos ($1,600) per month would be taxed at 18 percent, an increase from 15 percent;

• Income greater than 50,100 pesos and up to 167,000 pesos ($5,331) per month would be taxed at 23 percent, an increase from 20 percent;

• Income greater than 167,000 pesos and up to 250,500 pesos ($7,996) per month would be taxed at 26 percent, an increase from 22 percent;

• Income greater than 250,500 pesos and up to 384,100 pesos ($12,261) per month would be taxed at 29 percent, an increase from 25 percent and

• Income greater than 384,100 pesos per month would be taxed at 34 percent, an increase from 30 percent

Social Tax Change Initiative

The increase to social taxes also leaves lower incomes unaffected. The bill does not address employer contributions for social taxes. Under the proposed changes to employee social taxes:

• All income up to 26,720 pesos ($852) per month would continue to be tax free;

• Income greater than 26,720 pesos and up to 50,100 pesos ($1,600) per month would continue to be taxed at 10 percent;

• Income greater than 50,100 and up to 167,000 pesos ($5,331) per month would be taxed at 23 percent, an increase from 20 percent and

• Income greater than 167,000 pesos per month would be taxed at 29 percent, an increase from 25 percent.

The bill also would require the personal income tax of top executives to be calculated on actual income instead of their employer's estimate, the Minister of Economy and Finance said.

To contact the editor responsible for this story: Jared Mondschein at jmondschein@bna.com

For More Information

The announcement by the Minister of Economy and Finance is available in Spanish at https://www.presidencia.gub.uy/comunicacion/comunicacionnoticias/astori-iva-irpf-rendicion-cuentas.

More details on the proposed changes are available in Spanish at https://medios.presidencia.gub.uy/tav_portal/2016/noticias/NO_T624/Presentacion-mef.pdf.

More information on payroll issues in Uruguay can be found in the Uruguay country primer.