FEBRUARY 2017
There Is Nowhere To Park!Tax Benets For The
Uruguay
Tax Benets for Activities Promoted By Government
in 2016
The Investments Promotion Act (the Act) aims to
promote and protect domestic and foreign invest-
ments, granting them equal treatment.
In Uruguay, investments are admitted without any
prior authorization or registry. The Uruguayan legal
system guarantees the free transferability of capital
and prots.
The Act sets forth a number of tax incentives, some
of which apply automatically, while others require a
declaration by the Executive Branch, through which
the Uruguayan Government decides to promote cer-
tain activities with tax incentives.
Signicant tax benets are granted to activities de-
clared to be promoted by the Executive Branch. This
follow the activities tax beneted by the Uruguayan
Governmentunder the Investments Promotion
Actlast year.
From Uruguay to the WorldTax Benets for
Shared Services Centers
Over the last few years, Uruguay has become a strate-
gic location for global organizations doing business
across the Latin American market. More and more
shared services centers (SSCs) have been estab-
lished in Uruguay, proting from Uruguays historical
conditions: political and economic stability, demo-
cratic tradition, free inow and outow of foreign cur-
rency, absence of corporate income taxation over
foreign sourced income, among others.
SSCs incorporated in Uruguay benet from a 90
percent exemption from Corporate Income Tax (Im-
puesto a las Rentas de las Actividades Economicas
IRAE) and a full exemption (100 percent) from Net
Worth Tax (Impuesto al PatrimonioIPAT).
In 2016, the Executive Branch encouraged Uru-
guays SSCs, with the following measures.
Previously, only advice and data processing
servicesrendered to foreign related entitieswere
covered by the tax exemptions indicated above. Since
2016, the tax exemptions also apply to: (i) manage-
ment services (including strategic planning, business
development, advertising, personnel training and ad-
ministration); (ii) logistics and storage services; (iii) -
nancial administration; and (iv) research and
development.
In order to obtain the tax exemptions, SSCs are
requiredover a three-year periodto: (i) generate
150 new qualied job opportunities; and (ii) invest ap-
proximately $1.2 million for training Uruguayan per-
sonnel. Since 2016, the Uruguayan Government has
allowed SSCs to benet from the exemption from Net
Worth Tax (100 percent exempted assets) and from
Corporate Income Tax (limited to 70 percent of
income, not 90 percent), by generating 100 job oppor-
tunities and investing approximately $600,000 for
training purposes.
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Construction Of Parking Lots
In 2016, the Executive Branch issued a decree grant-
ing signicant tax benets for the construction of
parking lots in Montevideo, the capital city of the
country.
The Uruguayan Government declaredunder the
Investments Promotion Actthe promotion of con-
struction, expansion and operation of parking spaces
in certain areas of Montevideo. Such areas have been
considered to be a priority for tax benets purposes.
The construction and expansion of parking lots will be
eligible for tax benets only in cases where they in-
volve at least 50 vehicle spaces, and only for invest-
ments made up to January 1, 2020.
Among other benets, such investments will be ex-
empted from Corporate Income Tax by up to 20 per-
cent (this percentage could be increased depending on
certain variables). Movable assets intended for the
promoted activities will be exempted from Net Worth
Tax during their useful life, as well as real estate prop-
erties, but only for eight years. A Value Added Tax
(VAT) (Impuesto al Valor AgregadoIVA) credit will
be granted for purchases of equipment, machines,
supplies and services to perform the investments.
Uruguay as a Scientic And Technological
CountryTax Benets For Innovation
Tax incentives are the essence of the entire Uruguayan
tax system: rst, it was the turn of offshore compa-
nies, then free zones, then forestry, free ports, interna-
tional trading, and so on.
Now, it is the turn of scientic and technological in-
novation. In 2016, the Executive Branch granted wide
tax benets for promoting the performance of busi-
ness projects which involve scientic and technologi-
cal innovation.
s The rst of these benets consists of a Personal
Income Tax (Impuesto a la Renta de las Personas
FsicasIRPF) exemption, for a ve-year period, in
favor of those who support nancing business proj-
ects approved by the Uruguayan National Innova-
tion and Investigation Agency (Agencia Nacional de
Investigacion e Innovacion) (ANII). The exemp-
tion will only be applicable where the nancing is
given within two years following the ANIIs decision
of promoting the business project.
s The second of the benets provided by the Uru-
guayan Government consists of a Corporate
Income Tax exemption on those subsidies received
by Uruguayan companies from the ANII itself. Such
subsidies shall not be deemed as gross income for
Corporate Income Tax purposes. This benet is in
addition to those which are already in place, essen-
tially the increased deduction of those expenses in-
curred in personnel training in areas considered as
a priority in terms of science, technology and inno-
vation.
Get to Work!Tax Benets For Large Investments
in House and Ofce Construction
In 2016, the Executive Branch decided to grant sub-
stantial tax benets to those companies which, before
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the end of 2020, carry out investments of more than
$15 million for the construction of houses or ofces.
The benets are:
s 60 percent exemption from Corporate Income Tax
for 10 years;
s full exemption from Net Worth Tax for eight years
(in those cases where the investment is carried out
in Montevideo), or 10 years (where the investment
is carried out outside Montevideo);
s tax credit equal to the VAT included in the equip-
ment, machines, supplies and services acquired to
perform the investment;
02/17 Copyright 2017 by The Bureau of National Affairs, Inc.
s full exemption over all taxes on imports of such
equipment, machines, supplies and services, as
long as they do not compete with local industry.
Those companies interested in beneting from such
tax incentives should submit their relevant investment
project to the Uruguayan Government before the end
of 2017.
Guzman Ramrez, Senior Associate, Bergstein Abogados, Uruguay
Email: gramirez@bergsteinlaw.com
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