Type: Legislation
Effective Date: January 17, 2025
Uruguay is planning to implement a progressive VAT system with real-time rate adjustments based on individuals’ economic status, following Uzbekistan’s pioneering app-based VAT refunds. The initiative, developed with the Inter-American Development Bank, aims to address VAT’s regressive nature by linking tax rates to wealth and household expenditure instead of product types. Using the existing “tuapp” digital wallet, consumers would receive automatic VAT discounts at checkout, ensuring transparency and preventing retailers from withholding benefits. Similar schemes have been attempted globally, including Uzbekistan’s 2024 VAT refund system, which encourages formal economic transactions. The main challenges lie in technical implementation and political feasibility, as tax cuts for some may require compensatory increases elsewhere.
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