Uruguay
Financial Year – 1 January to 31 December
Currency – Uruguayan peso (UYU)
Corporate Tax Summary
Residence – Legal entities are considered residents if they are incorporated in Uruguay according to national laws. Foreign legal entities will be considered residents if they establish a formal address and finish all the formal procedures required according to the law.
Basis of Taxation – Resident companies pay tax only on income derived from Uruguayan sources. Nevertheless, there are certain exceptions for specific foreign income that can also be taxed.
Residents and permanent establishments pay Corporate Income Tax, known locally as IRAE, and non-residents pay Corporate Income Tax for Non Residents, known locally as IRNR.
Uruguay subscribes to the concept of permanent establishment according to the OECD.
| Reference | ||
| Corporate Income Tax Rate (%) | 25% | Taxable income is determined by calculating the difference between income and expenditure accrued during the fiscal year. In terms of expenses, the law requires that these meet conditions in order to be deductible. These include: • They must to be duly documented An inflation adjustment must be included in the calculation of the taxable income where the inflation rate accumulated in the last three years is over 100%. Fiscal losses can be carried forward for five fiscal years up to 50% of the taxable income of the fiscal year under determination. Transactions with foreign related parties are subject to transfer pricing rules according to OECD guidelines. The same applies to transactions with entities domiciled in low tax jurisdictions, notwithstanding whether the parties are related or not. Non-resident legal entities without a permanent establishment in Uruguay who provide services to a Uruguayan tax payer are subject to non-resident income tax at a rate of 12% applicable on the gross income. If the beneficiary resides in a country with low or no taxation, the rate is increased to 25% . The tax is collected through a withholding made by the local companies that pay the service involved. If there is no withholding agent appointed, the non-resident taxpayer must register a Uruguayan representative and pay the tax directly. |
| Branch Tax Rate (%) | 25% | |
| Withholding Tax Rate: | ||
| Dividends – Franked | 7% | Such withholding applies when the beneficiary is an individual resident or non-resident, either individual or legal entity. |
| Dividends – Unfranked | 0 | |
| Dividends – Conduit Foreign Income | 12% | |
| Interest | 3% to 12% | 12% non-residents. In case of interest on bank accounts the rate varies between 3-12% |
| Royalties from Intellectual Property | 12% | |
| Fund Payments from Managed Investment Trusts | 12% | |
| Branch Remittance Tax | 7% | When paying dividends |
| Net Operating Losses (Years) | ||
| Carry Back | ||
| Carry Forward | Fiscal losses can be carried forward for five fiscal years up to 50% of the taxable income of the fiscal year under determination. |
Individual Tax Summary
Residence – Individual residents in Uruguay who obtain their income from Uruguayan source are subject to Individual Tax, known locally as IRPF.
Natural persons are considered residents if they comply with one of the following conditions:
- Remain more than 183 days in Uruguayan territory
- Have their main activity or vital and economic interest in Uruguayan territory.
It is understood that a natural person has a vital interest when his/her spouse or children of minor age who depend on him/her reside in the country. It is understood that a natural person has an economic interest when the individual has an investment in property of more than USD 1,600,000, or participates directly in a business with a value of more than USD 4,700,000 and has engaged in projects or activities declared of national interest according to Law Nº 16.906 on Investment Promotion.
Basis of Taxation – There are two categories of income: capital and labour. Capital income includes earnings obtained from holding movable and immovable assets and capital gains derived from the transfer of assets or real estate. Under certain circumstances, this principle can be extended and income derived from holding movable assets outside Uruguay can be subject to IRPF. As a general rule, the tax on capital income is a flat rate of 12%, with some exemptions which are taxed at lower rates. Labour income refers to earnings obtained from rendering personal services as an employee or through self-employment. This category also includes an extension of the source criteria and income obtained by resident individuals derived from rendering services outside Uruguay is subject to IRPF when the payer of the salary or the fees is an IRAE tax payer.
The tax is levied at a progressive rate that varies from 0% to 36%, depending on the total annual gross income.
Filing Status – In some cases, there is no need to file a tax return. In other cases, taxpayers must file a separate return each financial year. Joint returns are permitted under certain circumstances.
Personal Income Tax Rates
| Taxable Income | Tax Payable – Residents | Tax Payable – Non Residents |
| From UYU 0 to UYU 31,633 | 0 | 12% |
| From UYU 31,633 to UYU 45,190 | 10% | 12% |
| From UYU 45,190 to UYU 67,785 | 15% | 12% |
| From UYU 67,785 to UYU 135,570 | 24% | 12% |
| From UYU 135,570 to UYU 225,950 | 25% | 12% |
| From UYU 225,950 to UYU 338,925 | 27% | 12% |
| From UYU 338,925 to UYU 519,685 | 31% | 12% |
| From UYU 519,685 | 36% | 12% |
The rates applicable to capital income apply differently according to the type of income and vary from 3% to 12%. Where the non-resident is domiciled in a BONT jurisdiction, the rate could be 30.25%
Goods and Services Tax (GST)
| Rate | 22% or 10% |
| Taxable Transactions | VAT is a tax levied on the internal circulation of goods and services within Uruguayan territory, the import of goods and the added value originating from the construction of real estate. Exports are taxed at a rate of 0%. The basic VAT rate is 22% and there is a minimum rate of 10% applicable to goods of basic necessity and medicines. In addition, certain goods such as gasoline, books, milk, metals (gold, silver, etc), machines and accessories used in agriculture, activities and services such as financial services provided by banks, land leases, etc., which are exempted from this tax. |
| Registration | All companies must register. A tax return must be filed, except in a few cases of activities of low economic dimension. |
| Filing and Payment | Payment is made on a monthly basis. Certain companies (due to their specific activity or budget billing amount) must also file the tax return on a monthly basis. All other taxpayers must file their tax return annually. Generally, payment is calculated as the difference between sales VAT less the included VAT in purchases and expenses. |
Other Taxes Payable
| Tax | Reference |
| Payroll Tax | Tax payed by the employer on the nominal wage comprises: 7.5% retirement deduction 5% healthcare coverage and other benefits 0.125% others Employees must pay the following tax on their nominal wages: |
| Payroll Tax | Transfer tax is applicable to property transfer and the rights associated to property that are located in the country. The rate is as follows: 2% transferor 2% purchaser 4% all other taxpayers, except for heirs and legatees in direct ascendant or descendent line with the testator, which is a rate of 3%. |
| Land Tax | There is an annual tax levied on urban, suburban and rural properties in order to finance expenses and investments made by the Elementary Education Council. The sum levied supports food programs, transport and school equipment, as well as repairs, maintenance and cleaning of schools. |
The IP is an annual tax levied on the net worth adjusted for tax purposes of, inter alia, IRAE taxpayers, corporations, joint stock companies, individuals and families. The taxable net worth is computed as the difference between assets and liabilities, adjusted for fiscal purposes according to certain rules provided for in the tax regulations. In principle all assets located, placed, or economically used in Uruguay are subject to this tax and, accordingly, this tax is not levied on assets located outside Uruguay.
For legal entities, the applicable rate amounts to 1.5% on the taxable net worth as at the close of the fiscal year. For banks and other financial entities in particular the tax rate is 2.8% and it is 3% for entities resident in low or no tax jurisdictions without a permanent establishment in Uruguay.
IP is also applied as a withholding tax on the balances owed to foreign persons as at 31 December every year. There is, however, a wide-ranging exemption available covering the balances deriving from imports, loans, and deposits of non-resident foreign individuals or legal entities.
For individuals and families, there is a progressive tax ranging from 0.5% to 0.8% applicable on the net worth as at 31 December of each year. There is a non-taxable minimum of approx. USD 130,000 which is doubled for families.
Last updated: 26.05.2020