- Introduction of Personalized VAT Proposal: The Ministry of Economy of Uruguay has initiated discussions on a personalized value-added tax (VAT) regime, with a proposal developed and financed by the Inter-American Development Bank in 2022, aimed at reforming the existing VAT system.
- Key Elements of the Proposal: The personalized VAT regime is built on three pillars: expanding the tax base by reducing exemptions, establishing a single VAT rate of 21%, and providing electronic reimbursements to the lowest-income 30% of the population to enhance equity.
- Implementation Challenges: Successful implementation of the reform faces several challenges, including the need for electronic transaction recording to prevent fraud, the requirement for businesses to adopt e-invoicing systems, managing large volumes of personal data securely, and ensuring real-time consumer identification at points of sale. These complexities may pose significant hurdles, particularly for smaller businesses.
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