The Uruguay government’s argument for including Bitcoin (BTC) and cryptocurrency profit tax overseas in its budget law, a measure that affects the capital’s roughly $620 million and could encourage the transition to Paraguay, which provides a competitive tax system for digital investors to digital assets.
The proposal would expand income tax for natural persons (IRPFs) Bitcoin and cryptocurrency tax rate tax. This is to match global standards but generate alerts about loss of competitiveness.
The reform aims to modernize the IRPF and include capital gains in cryptocurrencies, and is currently exempt if stored in a digital wallet or external exchange.
Uruguay, which previously taxed only interest on overseas bank deposits, will take a step towards cryptographic “world revenue” in line with the Organisation for Economic Co-operation and Development (OECD) agreement, based in Paris, formed by 38 countries.
According to 2023 data, the Ministry of Economic and Finance (MEF) estimates that 12% of the $620 million Uruguayan external capital is in cryptocurrency. This amount, equivalent to 79% of Uruguay’s GDP in 2023, includes not only digital assets such as Bitcoin, but also other financial assets such as bank deposits, investments in value, real estate properties and other products that generate income overseas.
This discussion revives a similar proposal for 2020, but now has a specific approach to digital assets. The official sector is the key to “fiscal fairness” and the opposition Cryptocurrency companies warn of risks to their local ecosystem.
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The Uruguay Digital Assets sector responded with concerns about the announcement. Pablo Montaldo, president of financial services, warned that “30% of Uruguay’s cryptocurrency startups will appreciate moving to Paraguay if this is approved.”
Meanwhile, Ana Lopez, founder of the Uruguay Crypto Hub, added: «This taxed cryptocurrency removes competitiveness. Paraguay offers 10% rates and legal clarity».
The Paraguayan scheme is called “Triple 10” (VAT, rent, dividends 10%) and applies to Bitcoin and cryptocurrency, and the Maquila Act can operate with reduced taxes. “The flow of Uruguayan’s digital asset investors increased by 40% in 2025,” said Carlos Fernández, financial advisor to Paraguayan.
Deby Eilender, an economist at the Center for Development Research, warned of the risks of the proposal, according to Infobae. In Uruguay, savings levels are low and the lowest portion is a productive investment. Often, they become more dollars than mattresses. Extending the IRPF to taxable capital gains on foreign investments will only cause disappointment,” he said.
The final decision will be made in Congress in the coming weeks. If approved, Uruguay will match the global financial standards of cryptocurrency, It puts the local position as digital innovation at risk. Paraguay, meanwhile, was taking advantage of the opportunity to attract the talent, businesses and capital of the digital assets of Latin America. Therefore, the digital economy of the region could be reconstructed around Asunción.
Furthermore, as reported by Cryptonoticia, central banks (BCUs) face criticism of the regulatory framework of virtual asset services suppliers (PSAVs). In that sense, it is deductible that a combination of financial pressure and lack of legal clarity can accelerate startup transitions.
