08/03/23

SOUTH AMERICA: EU recognises Uruguay as cooperative for tax purposes.

As published on step.org/industry-news, Wednesday 8 March, 2023.

The Economic and Financial Affairs Council of the European Union (ECOFIN) has granted Uruguay the status of “cooperating jurisdiction without assumed commitments”, meaning that it is no longer on the EU’s list of non-cooperative jurisdictions for tax purposes.

ECOFIN noted the steps Uruguay has taken to comply with recommendations made in 2021, most particularly through Law No. 20,095. The Law has made certain modifications to the tax regime to address potentially harmful tax practices or incentives that would allow unfair tax competition.

The Uruguayan Ministry of Economy and Finance cited in particular the work the country has done around passive income exemptions and economic substance requirements. It said that this change in status shows an international recognition that the country is “transparent and reliable”.

Separately, the Financial Action Task Force (FATF) noted at its most recent plenary meeting in February 2023 that Panama has made some “important steps” in its regulatory and compliance regimes. FATF commented that the country has improved its anti-money laundering and counter-terrorist financing measures, including demonstrating its ability to investigate and prosecute money laundering involving foreign tax crimes.

However, FATF also expressed concerns that Panama has not yet fully addressed all remaining measures in its action plan, despite timelines for doing so having expired in January 2021. “Panama should therefore continue to work on implementing its action plan to address its strategic deficiencies, by ensuring adequate verification, of up-to-date beneficial ownership information by obliged entities and timely access by competent authorities”, it said.

Failure to do so could result in FATF recommending that jurisdictions apply enhanced due-diligence measures to business relations and transactions with Panama.