Uruguay introduces disclosure for ultimate beneficial owners

1 January 2017, Uruguay’s Law on International Tax Transparency, the Prevention of Money Laundering and Terrorist Financing was brought into force. It was approved by parliament on 29 December.

The Law requires certain resident and non-resident entities to disclose the identity of their ultimate beneficial owners – defined as an individual who, directly or indirectly, holds at least 15% of the entity’s capital or voting rights, or otherwise has control over the entity – to the Central Bank of Uruguay. Reporting entities would also be required to provide documentation supporting their disclosures.

It applies to resident or non-resident entities that have a permanent establishment (PE) or place of effective control or management in Uruguay, or that own local assets valued in excess of approximately US $300,000 Resident entities that issue nominative or registered shares are further required to disclose the identity of their owners to the Central Bank. This reporting obligation previously applied for bearer shares.

The new law also requires domestic and foreign financial institutions to provide information about their resident and non-resident clients to the Uruguayan tax authorities on an annual basis under the OECD’s Common Reporting Standard (CRS) for the automatic exchange of information. The information includes account balances as of the end of the calendar year, annual account averages, gains or profits generated by deposits, and financial assets held in custody by the financial entity.

The new law also introduces measures to discourage the use of foreign entities located in low tax jurisdictions or that benefit from low tax regimes, as well as incorporating new provisions adopting the OECD recommendations under BEPS Action 13, regarding country-by-country reporting for transfer pricing purposes.