Domestic Qualifyng Minimum Top-Up Tax (DQMTT)

On August 31, the government submitted the National Budget Law for the 2025–2029 five-year period to Parliament.

The policies contained in the budget respond to three government priorities, which are undoubtedly of great importance:

• Accelerate the country’s growth to create and maintain quality jobs.
• Strengthen the social protection framework to fight poverty and inequality.
• Improve security to strengthen coexistence among the country’s inhabitants.

Given the need to increase the country’s resources, a strategy has been defined consisting of two components: increasing collection efficiency and introducing changes to the tax system. These changes aim not only to increase revenue but also to correct existing technical inconsistencies and allow the country to align with global tax standards.

Among the tax initiatives, two key measures stand out: the implementation of the Global Minimum Tax (GMT) in Uruguay, which affects multinational enterprises with revenues exceeding EUR 750 million, and the pursuit of equity in tax treatment between capital gains from domestic and foreign investments.

In this edition, we focus on analyzing the rules introduced to bring into scope in Uruguay the GMT that applies to local entities forming part of certain multinational groups that, by not reaching a 15% effective tax rate locally, are required to pay top-up tax in the jurisdiction of their ultimate parent entity.

For this reason, the Domestic Qualifying Minimum Top-Up Tax (DQMTT) is created as part of the implementation of OECD Pillar Two (GloBE Rules), with the objective of ensuring that such top-up tax is paid in Uruguay instead of in the country of the group’s parent entity.

The DQMTT is an annual tax triggered at the closing date of the ultimate parent entity’s fiscal year.

Taxpayers

Entities subject to the DQMTT are Uruguayan companies that are members of a multinational group with consolidated revenues exceeding EUR 750 million in at least two of the four fiscal years preceding the analyzed year.

A multinational group is defined as a set of entities linked by ownership/control that prepare consolidated financial statements and have a presence in more than one jurisdiction. A group may also be a single entity located in one country with one or more permanent establishments in other countries.

The law defines Constituent Entities as all entities of the group, including permanent establishments.

The Ultimate Parent Entity is defined as the entity that controls the rest of the group and is not owned, directly or indirectly, by another entity.

Excluded Entities include governments, international organizations, non-profit organizations, pension funds, investment funds, and real estate investment vehicles that are ultimate parent entities.

Scope

The DQMTT applies to income earned by taxpayers regardless of where it was generated (domestically or abroad) and is assessed at the close of the fiscal year. The law defines fiscal year as the accounting period for which the group’s ultimate parent entity prepares its financial statements.

Effective Tax Rate Calculation

In Uruguay, the effective tax rate (ETR) will be calculated for each fiscal year according to the following ratio:

ETR in Uruguay = Adjusted Covered Taxes ÷ Qualified Net Income

Both concepts apply to all entities located in Uruguay. Qualified net income equals profit minus allowable losses, as determined under the rules.

• Covered Taxes include:
• Income or profits tax
• Substitute corporate income taxes
• Taxes on undistributed profits and capital

DQMTT Calculation

The tax is calculated on a jurisdictional basis (not per entity), excluding investment entities:

DQMTT = (15% – Uruguay ETR) × (Qualified Net Income – Substance-based Income Exclusion) + Additional Adjustments

The Substance-based Income Exclusion is the sum of payroll exclusion and tangible asset exclusion for each Uruguayan entity, except investment entities.

Payroll exclusion: a percentage of eligible payroll costs of employees performing activities for group companies in Uruguay (9.6% starting in 2025, gradually reduced to 5% by 2033).

Tangible asset exclusion: a percentage of the book value of eligible tangible assets located in Uruguay (7.6% starting in 2025, reduced to 5% by 2033).

Allocation

The DQMTT allocated to each Uruguayan entity will be determined as follows:

DQMTT × Entity’s Qualified Net Income ÷ Sum of Qualified Net Income of all Constituent Entities

Thus, the tax is allocated proportionally to each entity’s qualified net income.

All constituent entities located in Uruguay belonging to the same multinational group are jointly and severally liable for the DQMTT.

Adjustments and Exemptions

The law provides for additional adjustments to the DQMTT, either through recalculation of the ETR or consideration of taxes from prior periods.

Additionally, a local constituent entity may elect not to pay the DQMTT for a fiscal year if:

The average revenue of all entities in Uruguay is less than EUR 10 million, and

The average profit/loss of all entities in Uruguay is less than EUR 1 million (for the current and two preceding fiscal years).

The law includes several chapters detailing how to transform accounting profit into “qualified net income” and how to measure “adjusted covered taxes” that are part of the 15% ETR calculation.

As no special effective date was stipulated, the DQMTT will apply as from January 1, 2026, for fiscal years ending on or after that date.

It should be noted that, once enacted, it will be necessary to analyze the implementing regulations issued by the Executive Branch to operationalize the tax.

Moreover, the Executive Branch must suspend the application of the DQMTT if the Inclusive Framework decides to eliminate or suspend the GloBE rules.

Likewise, it must exempt or exclude from the DQMTT Uruguayan entities belonging to a multinational group whose ultimate parent entity is located in a jurisdiction excluded from the application of the Income Inclusion Rule (IIR) under the GloBE rules.