In a letter sent to Uruguay's Minister of Education Pablo Da Silveira, a spokesperson for Spotify said: "If the proposed reform became law in its current form, Spotify's business in Uruguay could become unfeasible, to the detriment of Uruguayan music and its fans," claiming that the amendment would force it to "pay twice" the amount of royalties.

Spotify currently pays out at 70%. Doubling royalties would cause them to pay out more than they make in subscription and ad revenue. This is why they're shutting down.