Uruguay announces “significant” tax cut for individuals

A “significant” tax cut is coming in Uruguay, according to the Minister of Economy, Azucena Arbeleche, after meeting with President Luis Lacalle Pou to advance these changes.

In an interview with the radio station El Espectador, the official did not give details as to what the specific changes will be, but she did say that they will involve changes in social security taxes on personal income.

The Minister emphasized that this is not a temporary modification but that the tax reductions announced will be maintained over time.

Arbeleche anticipated that Luis Lacalle Pou would provide more details on this matter on March 2, when he will give his speech before Congress.

TAX CUTS IN URUGUAY TODAY ARE A “PRIORITY”

The Minister responded to those criticizing prioritizing a tax cut over other items, such as early childhood care.

In this regard, she stated that the current administration allocates resources to early childhood are “much higher” than the previous government’s.

“At the moment, the priority is the Personal Income Tax (IRPF) and the Social Security Assistance Tax (IASS),” the official reinforced.

And she emphasized that when discussing Personal Income Tax, reference is made to people earning around $39,600 (US$1,007.67).

THE FISCAL RULE IN URUGUAY

Arbeleche affirmed that the tax cut would be carried out in compliance with the goals set in budgetary terms:

“This government has been meeting the fiscal objectives for three years. Today we have something that we had before: a fiscal rule”, he said.

The projected fiscal deficit for 2023 is 2.6%, and the economic team has already incorporated these issues anticipated by the Minister.

According to her vision, this tax cut is possible due to the “excellent management of resources” Lacalle Pou’s government has carried out.

THE IMPACT OF THE DROUGHT

Regarding the lack of water suffered by the Uruguayan countryside, Azucena Arbeleche acknowledged:

“The drought will impact the economic growth for this year (…). The uncertainty it generates is huge”.

However, she tried to reassure producers by stating:

“From the Ministry of Economy and Finance, we provide the peace of mind that the necessary resources will be available to face this situation. This tranquility is given to us by the good administration of the Government”.

She also considered that the rise in international rates and the war between Russia and Ukraine add spice to global economic and financial uncertainty.

DOLLAR IN URUGUAY

Regarding the appreciation of the Uruguayan peso against the US dollar, the Minister assured that the exchange market is well supplied with dollars from exports and tourism.

“The country has a huge supply of dollars that has to be accompanied by a significant demand for dollars so that the exchange rate does not fall,” warned Arbeleche.

“The government is actively buying dollars in the local exchange market.”

With information from Bloomberg

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