Uruguay: Deemed-dividend regime, loss carryforward | KPMG | GLOBAL
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Uruguay: Deemed-dividend regime, loss carryforward limitations effective in 2017

Uruguay: Deemed-dividend regime, loss carryforward

Recently enacted legislation in Uruguay introduces a deemed-dividend regime and new rules imposing limitations on loss carryforwards.


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Law 19.438 (Ley de Rendición de Cuentas y Balance de Ejecución Presupuestal) establishes, among other tax provisions, a deemed-dividend regime and limitations on loss carryforwards. The provisions are effective at separate times in 2017.

KPMG observation

Multinational companies operating in Uruguay must now plan for possible deemed dividends if there are undistributed earnings and plan for the limitations that will affect their ability to carry forward losses. 

Deemed-dividend regime

Under the current corporate tax regime, dividend distributions to resident or non-resident individuals or entities are subject to a withholding tax of 7%.

Law 19.438 establishes a deemed-dividend regime—that is, net fiscal profits accumulated for a period of more than three fiscal years will be treated as distributed and are subject to the 7% withholding tax. There are some exceptions, primarily with respect to reinvestments of accumulated earnings made in local companies or in certain fixed assets.

The deemed-dividend regime will be effective 1 March 2017.

Loss carryforward limitations

Current law allows the full carryover of tax losses for a period of five years from the end of the fiscal year in which the loss was incurred.

Law 19.438 limits the loss carryforward to 50% of the net fiscal income for each year of the five-year carryforward period, after all other adjustments contemplated by law are made. Thus, the new changes not only limit the loss calculation for each fiscal year, but also increase the likelihood that the losses may not be used before the end of the carryforward period.  

This loss carryforward measure will be effective 1 January 2017.


For more information, contact a tax professional with KPMG’s Latin America Markets practice or with the KPMG member firm in Uruguay:

Devon Bodoh | +1 (202) 533 5681 | dbodoh@kpmg.com

Alfonso A-Pallete | +1 (305) 913 2789 | apallete@kpmg.com

Luis A. Aisenberg | + 598 290 24546 | luisaisenberg@kpmg.com

Gustavo Melgendler | + 598 290 24546 | gmelegendler@kpmg.com

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