Uruguay
The country profile includes data on the income taxes paid by workers, their social security contributions, the family benefits they receive in the form of cash transfers as well as the social security contributions and payroll taxes paid by the employers. Results reported include the average and marginal tax burdens for eight different family types.
It also describes the personal income tax systems, all compulsory social security contribution schemes and universal cash transfers as well as recent changes in the tax/benefit system.
The national currency is the Uruguayan Peso (UYU). In 2013, the average exchange rate was UYU 19.98 to USD 1. In that year, the average worker earned UYU 252 059.77. Uruguay also has a Base for Benefits and Contributions (Base de Prestaciones y Contribuciones – BPC) which was UYU 2 598 in 2013.
The Report includes estimates of the tax wedge over the whole of the income distribution ordered by deciles of total labour income of formal wage earners derived from the household surveys.
1. Personal income tax system
The tax year for the personal income tax is the calendar year.
1.1. Central government income tax
The income tax is levied on Uruguayan-sourced income. In addition, some foreign sources of income, such as capital gains and labour income are also liable. The personal income tax is divided into two categories. The first applies to capital gains which are subject to a tax rate of 12%. The second applies to all sources of labour income.
Labour income includes all income, such as wages, commissions, overtime, bonuses, holiday pay, etc. It does not include amounts paid in respect of family allowances, subsidies (for sickness, unemployment and maternity) and temporary compensation due to layoffs.
1.1.1. Tax unit
In this Report, it is assumed that members of the family are taxed separately. In practice, spouses may opt to file a joint tax return for the household.
1.1.2. Tax allowances and tax credits
1.1.2.1. Standard tax credits
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Social security contributions paid to the Social Prevision Bank (Banco de Previsión Social – BPS).
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An annual allowance of 13 BPCs for each child in the care of the taxpayer.
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An annual allowance of 6.5 BPCs for each child in respect of medical expenses for children or other dependents.
The total of the tax credits is calculated by applying a marginal rate to the allowances according to the following schedule. The tax credits are then deducted from the liable personal income tax.
1.1.3. Tax schedule
The annual income tax liability was calculated on the taxable income according to the following schedule in 2013:
1.2. State and local taxes
No state or local taxes are levied on wages.
2. Compulsory social security contributions
2.1. Employee contributions
Employees are required to pay contributions for the following:
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Old age, disability and survivors program. Employees paid 15% of their gross wages excluding the annual bonus. There is an upper ceiling to these contributions (UYU 569 124 in 2013).
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Healthcare services. Employees without children earning up to UYU 84 570 (30 BPC) per year paid 3% of their gross wage. The contribution rate was raised to 4.5% if earnings were higher. There was also an additional 1.5% for employees with children.
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Labour reconversion fund (FRL). Employees paid a contribution of 0.125% of the gross wages excluding the annual bonus.
2.2. Employer contributions
Employers are required to make the following contributions on behalf of their employees:
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Old age, disability and survivors program -7.5% of the payroll subject to an upper ceiling of UYU 1 278 588 in 2013.
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Healthcare insurance -5% of the payroll.
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Work injury insurance -6.9% of the payroll.
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Labour reconversion fund (FRL) -0.125% of the payroll.
3. Universal cash transfer
3.1. Amount for spouse and for dependent children
There are cash transfers for children paid on a monthly basis. In 2013, the annual amounts paid are described in the following schedule.
4. Main changes in tax/benefit since 2013
The BPC varies in accordance to the consumer price index. This directly affects the income tax schedule, monetary transfers and social security contributions. In 2015 the BPC was UYU 3 052.
5. Memorandum items
5.1. Identification of an AW
The data refer to the earnings of workers within the formal sector. The average worker’s wage was calculated using microdata from the national household surveys.