Bill of Law on the Modification of the Banking Secrecy and Tax Transparency in Uruguay regarding the Final Beneficiaries Registry

This past July 15, the Uruguayan Executive Power sent to Congress a Bill of law with modifications to the banking secrecy and tax transparency norms. With this Bill the Uruguayan government not only set the amendments to the banking secrecy and tax norms but also set a series of norms regarding the registry of final beneficiaries and holders of registered shares or equity interest.

In this sense, the Project sets that the entities that are residents in Uruguay, including the sociedades anónimas (stock companies) with registered shares or bearer shares, trusts, investment funds or nonresident entities that act under the figure of permanent establishment or that have their head offices in Uruguay, are obliged to identify their final beneficiaries and the holders of the registered shares or equity interest and register said information in a record that will be kept for such purpose by the Central Bank of Uruguay. The final beneficiary is that physical person that either directly or indirectly holds at least 15% of the capital stock or of the voting rights, or that by other means exercises the final control of a corporation; this control may also be exercised through a chain of title. The holders of the registered shares must communicate in addition to the identification data of the holders, their interest percentages.

However, partnerships, agricultural, civil or de facto companies that are composed exclusively by final beneficiaries, as well as the corporations that are listed in local or foreign stock exchanges, investment funds, condominiums, community properties and concubinages are exempted from the obligation to provide identification.

The Executive Power will set the compliance terms of this obligation; however, they may not exceed the following dates:

• For resident corporations with bearer shares and for nonresident with Permanent Establishment or head office in Uruguay: 09/30/2017.
• For corporations with registered shares, partnerships and other: 06/30/2018.

Nevertheless, the Project proposes for this Registry to start on January 1, 2017.

The entities that will have access to the information existing in said Registry will be the Tax Administration Department (DGI, for its initials in Spanish), the National Secretary’s Office against the Money Laundering, Judicial Power, Public Transparency and Ethics Board, and any other entity expressly authorized in writing by the registered entity.

As for the sanctions for the failure to comply with this obligation, the Bill stipulates the following:

• Failure to provide identification, failure to communicate changes or failure to protect the information will be fined 100 times the value of the Contravention Fine.
• Prohibition to pay dividends and profits, in case they are paid; the fine will be equivalent to the amount unduly paid.
• Suspension of the Sole Certificate of the Tax Administration Department.
• In case of use of inadequate forms in order to tempt mistakes on the identification of final beneficiaries, a fine of up to 1000 times the value of the Contravention Fine.
• Prohibition to record legal acts or businesses in the public registry offices.

Image: Francesco Gallarotti