Corporate Income Tax in Uruguay 2026: IRAE, Dividends and Smart Structures

Last reviewed: November 2026 · Reviewed by Stéphane Gombauld, tax expert, technologist and digital nomad

You are about to incorporate in Uruguay, or already own a Uruguayan company and want to know what it really pays. After this guide you will know the 2026 IRAE rules, the cost of taking money out, and which incentives a small founder can realistically use.

Uruguay corporate income tax in 2026: the key figures

What changed for 2026

• Domestic minimum tax in force. The 2025–2029 budget law, Law 20.446 of 16 December 2025, added Title 21, the Impuesto Mínimo Complementario Doméstico (IMCD). Article 665 applies it from promulgation. Decree 206/026 of 31 August 2026 sets how entities protected by tax-stability clauses claim compensation.
• New investment promotion decree. Decree 329/025 regulates Law 16.906 from 1 February 2026. Projects above UI 180 million filed before 31 December 2027 can get a 100% IRAE exemption on eligible investment.
• Free zone staffing rule rewritten. Law 20.446 (art. 196) gave new wording to art. 18 of Law 15.921: 75% Uruguayan staff, or 50% for service users for the term of their user contract.
• Unchanged: the 25% IRAE rate and the 7% dividend rate.

Is this guide for you?

Read on if you…

• plan to set up a Uruguayan company as a founder, freelancer or small agency owner;
• already own a Uruguayan SAS, SRL or SA and want to know what it costs to take profits out;
• are weighing a free zone, the software exemption or investment promotion.

Probably not your case if you…

• work alone with modest revenue and no plan to incorporate. Start with business expenses in Uruguay;
• run a group with EUR 750 million of revenue. The IMCD and transfer pricing need a dedicated team.

How does IRAE work in 2026?

IRAE (Impuesto a las Rentas de las Actividades Económicas, tax on business income) is Uruguay's corporate income tax. Law 18.083 created it in 2007, and it now sits in Title 4 of the 2023 consolidated tax code. Under art. 23 of Title 4, the rate is a flat 25% of net taxable income. There is no reduced bracket for small companies.

Territorial scope: what gets taxed

IRAE is territorial. Art. 16 of Title 4 covers income from activities carried out, goods located or rights used economically in Uruguay. Profit from work genuinely performed abroad is outside its scope.

Here's the catch. Since fiscal years starting 1 January 2023 (Law 20.095), foreign dividends, interest and royalties are taxed in a "non-qualified" multinational group entity. That typically means one without adequate substance in Uruguay. A one-person SAS owned by an individual is usually outside this rule. A holding inside a foreign group may be caught.

From profit to tax

1. Start from accounting profit.
2. Add back non-deductible items. Under art. 31 of Title 4, a cost paid to a non-resident taxed at 12% is only 48% deductible (12 ÷ 25). A foreign supplier taxed at 25% or more is fully deductible.
3. Remove exempt income. Dividends received from other IRAE taxpayers are exempt under art. 66 lit. M of Title 4.
4. Offset tax losses. Art. 32 of Title 4 allows losses from the last five years, adjusted for consumer-price inflation, with the oldest used first.
5. Apply 25% and subtract the payments already made during the year.

Capital gains are part of the IRAE base. Deduction details: business expenses in Uruguay.

Paying during the year

Companies pay IRAE in monthly advances based on the previous year's tax (PwC, secondary). On top of that, art. 116 of Title 4 sets a minimum monthly payment. The 2026 DGI table (Decree 310/025) runs from UYU 6,840 to UYU 19,240 a month. Your band depends on revenue as a multiple of the small-business limit.

Good news: these payments count against your IRAE. The catch: art. 116 says any excess over the final tax creates no credit. A loss-making year still costs you the minimum.

The annual return is self-assessed and due by the end of the fourth month after year-end (PwC, secondary). You choose the year-end. The exact days depend on your taxpayer group, CEDE or NO CEDE, in the DGI 2026 due-date calendar.

What does it cost to take profits out?

Uruguay taxes profit twice: once in the company, once when it leaves.

• Non-resident shareholders. Dividends paid by an IRAE taxpayer carry 7% IRNR under art. 18 of Title 8. On USD 100 of profit, IRAE takes USD 25 and dividend tax USD 5.25. You keep USD 69.75, a combined 30.25%.
• Undistributed profit. Under art. 14 of Title 8, taxable profit older than three fiscal years becomes a deemed dividend, taxed at 7%. Reinvestment in fixed assets, intangibles or resident companies reduces that base.
• Other payments abroad. Fees, royalties and most interest paid to non-residents carry IRNR of 12%. Entities in low or no-tax jurisdictions pay 25%.
• Resident individual shareholders. They pay IRPF at 7% on dividends from IRAE taxpayers, under art. 37 of Title 7. See capital gains tax in Uruguay for other investment income.

Your home country may tax the dividend again, usually with a credit for the Uruguayan 7%. Choosing between neighbours? Compare corporate income tax in Paraguay.

Which company structure fits your business?

For most solo founders, the SAS is the default. Under Law 19.820, one person can own it, liability stops at your contribution and there is no fixed minimum capital. One limit: an SA cannot be the sole shareholder. The legal forms of business in Uruguay guide compares each form, and you can request a structure check at Heavnn business setup.

SAs also pay ICOSA, a fixed corporate control tax. For 2026 the DGI sets it at UYU 55,732 at incorporation and UYU 27,866 at year-end, paid through monthly advances of UYU 2,322.

Which incentives can cut your corporate tax?

Free trade zones

Free zone users are exempt "from all national taxes, created or to be created" on the activities authorised under the law (art. 19, Law 15.921). To keep that status, at least 75% of staff must be Uruguayan citizens, or 50% for service users. Anything outside the authorised activity is not covered. Large groups should run the IMCD numbers separately: a free zone's low effective rate is what it measures.

Software, biotech and bioinformatics

Art. 66 lit. S of Title 4 exempts income from these activities. For software you develop and exploit, the exempt share follows a ratio: your own direct development costs, plus 30%, over the asset's total costs. Services are fully exempt when Uruguayan direct costs exceed 50% of total direct costs. A solo founder subcontracting the coding abroad will struggle with both tests.

Investment promotion (Law 16.906)

Law 16.906 lets projects approved by the COMAP commission deduct a share of the investment from IRAE. Since 1 February 2026, Decree 329/025 sets that share through a scoring matrix. Projects above UI 180 million (filed by end-2027) or UI 300 million (by end-2028) can reach 100%.

Small businesses

Very small businesses fall under art. 66 lit. E of Title 4: their income is exempt from IRAE and they pay a fixed monthly IVA mínimo instead of standard VAT. For 2026, annual revenue must stay below UYU 1,959,229. It suits a micro sole trader, not a growing company.

Where is your company really taxed?

A Uruguayan SAS managed entirely from Spain or Germany may be treated as resident there under place of effective management rules, meaning where key decisions are actually taken.

The reverse risk exists too. Run a foreign company from your Montevideo flat and Uruguay may see a permanent establishment, a fixed place of business that creates a taxable presence. Profit from that activity falls under IRAE.

In practice: hold board meetings and sign key contracts where you want the company taxed, and keep minutes. Moving yourself too? Read tax residency in Uruguay.

Common mistakes (and what they cost)

• Running a foreign company from your home in Uruguay → a permanent establishment claim and 25% IRAE on profits you thought were untaxed abroad.
• Claiming the software exemption without Uruguayan development costs → the exempt share shrinks, and 25% IRAE applies with fines and surcharges.
• Parking profit in the company indefinitely → after three fiscal years, the deemed dividend rule charges 7% anyway.
• Forgetting the minimum payments in a loss year → at least UYU 6,840 a month, never refunded. Missed payments trigger late-payment fines.
• Ignoring the 1.5% net worth tax → an annual charge on company equity that surprises holding structures.

Frequently asked questions

What is the corporate tax rate in Uruguay in 2026?

The corporate income tax, IRAE, is a flat 25% on net Uruguayan-source profit in 2026, whatever the company's size (art. 23, Title 4). When profit is paid to a non-resident shareholder, 7% IRNR applies, so the combined burden on distributed profit is 30.25%. Groups with consolidated revenue of EUR 750 million or more also face a 15% domestic minimum tax.

Does Uruguay tax foreign profits of companies?

As a rule, no. IRAE is territorial and only reaches income from activities, goods or rights used in Uruguay. The exception: since fiscal years starting 1 January 2023 (Law 20.095), foreign dividends, interest and royalties are taxable in a non-qualified entity of a multinational group. That typically means one without adequate substance in Uruguay.

What is the best company type for a freelancer in Uruguay?

For most solo founders the SAS (simplified stock company, Law 19.820) is the practical default. One person can own it, liability is limited and there is no fixed minimum capital. The tax is the same 25% IRAE as for an SRL or SA. Very small sole traders below the 2026 small-business revenue cap pay no IRAE and may be better off without a company.

Are free trade zone companies tax-free in Uruguay?

Free zone users are exempt from all national taxes, present and future, on the activities they are authorised to carry out under the law (art. 19, Law 15.921). They must keep at least 75% Uruguayan staff, or 50% for service users. Activities outside the authorisation are not covered, and large groups must check the domestic minimum tax separately.

How are dividends from a Uruguayan company taxed?

Dividends paid by an IRAE taxpayer to a non-resident shareholder carry 7% IRNR, withheld by the company. Resident individuals pay 7% IRPF on the same dividends. Dividends a Uruguayan company receives from another IRAE taxpayer are exempt. Profit left undistributed for more than three fiscal years can be taxed at 7% as a deemed dividend.

When is the Uruguayan corporate tax return due?

The company chooses its fiscal year-end. The annual IRAE return is generally due by the end of the fourth month after year-end. The exact day depends on your group (CEDE or NO CEDE) in the DGI calendar. During the year you pay monthly advances, never less than the 2026 minimum of UYU 6,840 to UYU 19,240 a month.

Related guides

• Legal forms of business in Uruguay: SAS, SRL, SA compared
• Deductible business expenses in Uruguay
• Uruguay tax landscape overview
• VAT and other specific taxes in Uruguay
• Capital gains tax in Uruguay
• Corporate income tax in Paraguay
• Corporate income tax in Brazil
• All country tax guides

Sources

• Texto Ordenado 2023, Title 4 (IRAE), art. 23 – IMPO
• Texto Ordenado 2023, Title 8 (IRNR), art. 18 – IMPO
• Title 21 – Impuesto Mínimo Complementario Doméstico – IMPO
• Minimum monthly IRAE payments 2026 – Dirección General Impositiva
• Due-date calendar 2026 – Dirección General Impositiva
• Law 15.921 (free zones), article 19 – IMPO
• Decree 329/025 (investment promotion) – IMPO
• Uruguay corporate tax administration – PwC Worldwide Tax Summaries (secondary)

This guide is general information, not personalised tax advice. See how we research and review.