On 15 September 2026, the Uruguayan government published Decree 206/026, establishing a compensation mechanism for entities subject to the Domestic Minimum Complementary Tax (Impuesto Mínimo Complementario Domestico – IMCD) that benefit from fiscal stability clauses. The IMCD implements the OECD/G20 Pillar Two Global Anti-Base Erosion (GloBE) rules at the domestic level, ensuring a minimum 15% effective tax rate for multinational enterprise (MNE) groups with annual revenues exceeding EUR 750 million. The decree addresses a critical interaction: taxpayers with pre-existing fiscal stability agreements (under Investment Law 16.906 or free zone regimes) that guarantee a fixed tax rate or exemption may face a conflict when the IMCD imposes a top-up tax. The new rule allows these entities to compensate the IMCD liability against the tax benefits secured by their stability clauses, effectively preserving the contractual certainty while aligning with the global minimum tax framework.
Key Takeaways
- Compensation Mechanism Design: Eligible entities may apply to the DGI to offset their IMCD liability using the tax savings guaranteed by their fiscal stability clauses. The compensation is calculated by comparing the theoretical tax under the stability regime versus the standard corporate income tax (IRAE) rate, ensuring the benefit does not exceed the top-up tax due. Applications must be submitted electronically via the DGI portal within 90 days of the decree’s publication.
- Preservation of Legal Certainty: The decree explicitly states that the compensation does not constitute a modification or waiver of the stability clauses themselves. This safeguards investor confidence by honoring contractual commitments made by the Uruguayan state, while simultaneously fulfilling the country’s international obligations under the Pillar Two multilateral convention.
- Impact on MNE Group Structures: Affected groups must reassess their Uruguayan entity structures, particularly those operating under free zone or investment law regimes. The interaction between the IMCD, the compensation mechanism, and the Qualified Domestic Minimum Top-up Tax (QDMTT) safe harbor requires careful modeling to avoid double taxation or unintended tax leakage. Tax directors should coordinate with local advisors to file the compensation request timely and adjust transfer pricing documentation accordingly.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement