The tax administration confirms directors’ fees are fully deductible for corporate income tax, including amounts exempt from social security contributions.
Uruguay’s Tax Administration (DGI) issued a clarification on 31 July 2025 confirming that directors’ fees established in a company’s bylaws are deductible as expenses for corporate income tax (IRAE) purposes, even when a portion of the payments is exempt from social security contributions.
The clarification, published as Consultation No. 6718, addressed a taxpayer’s inquiry on the treatment of annual statutory allowances paid to directors based on company profits. The company had withheld Category II personal income tax (PIT) and social security contributions up to the ceiling set under Law No. 16,713, with amounts exceeding that threshold exempt from social security contributions.
According to the DGI, article 33 of Decree No. 150/007 establishes that directors’ fees are deductible for IRAE purposes up to the amount of pension contributions, which also covers the portion of remuneration not subject to social security contributions.
The ruling provides administrative guidance for companies on the tax treatment of director remuneration, confirming that deductibility applies to the full amount of statutory directors’ fees regardless of the social security contribution limits.
