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TAX SYSTEM
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The main direct taxes applied in Uruguay to companies include the Corporate Income Tax (IRAE) at a rate of 25% and the Wealth Tax (IP) at a rate of 1.5%. Only income from Uruguayan source is levied, partially adjusted to inflation, and no tax credit is granted for taxes levied abroad, unless there are double taxation agreements in force.
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The main direct tax levied on natural persons is the Personal Income Tax (IRPF). This tax is a personal and direct tax which levies the income obtained by natural persons residing in Uruguay at an increasing rate according to the income received. Residents are natural persons staying in Uruguay for more than 183 days during a calendar year and who establish their main core or center of activities or have economic or vital interests in Uruguay.
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Income from Uruguayan sources obtained by non-resident natural or legal persons without permanent establishment in the country are subject to the Non-Resident Income Tax (IRNR). The IRNR is applied at proportional rates ranging from 3% to 12%, depending on the type of income.
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The main indirect taxes include the Value Added Tax (VAT) and Excise Tax (IMESI). VAT's basic rate is 22%, with a minimum rate of 10% only applicable to certain products and services. Exports and circulation of most agricultural products are applied the zero rate regime, whereby tax credit is reimbursed.
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The Excise Tax (IMESI) is applied to the first disposal at any title carried out by producers or importers of certain products, excluding exports. Main products which fall under this category are fuel, tobacco, beverages, cosmetics and cars and the rate varies according to the item.
At the time of assessing any investment in Uruguay, be aware that the country has a wide range of incentives which, among other benefits, allows you to discount the investment made from future income levied by IRAE.
For more information, refer to the Investment Promotional Schemes chapter here.
More info here.
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TAX RESIDENCE
The natural person that requires a certificate of Tax Residence in the country, will be presented to any dependency of the General Tax Direction (DGI for its acronym in Spanish) with the form 5202 available here.
To obtain the requested tax residence certificate, the interested party must prove his/her tax residence in the country, according to the following criteria:
I) Permanence for more than 183 days during the calendar year in Uruguayan territory, accredited through the Arrival Certificate issued by the National Immigration Office.
II) Establishment in national territory of the main nucleus or base of activities. You can be credited, through a notarial or accounting certificate of total income, to which you must attach the declaration of the taxpayer (with notarization of signature) in which it is indicated that:
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the applicant does not have other income to those referred in the certification.
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in case there is income generated in other countries, indicate that these are lower than those originated in our country. This comparison must be made country by country.
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it should be clarified that the revenues generated in our country are not purely pure capital income.
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the aforementioned information must refer to the year or to the years that the Certificate is requested.
Unless the taxpayer proves his tax residence in another country, it can also be applied for if he has an investment in Uruguay:
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in real estate for a value of more than 15:000,000 UI (USD 1,600,000 approx.) or for a value of more than 3:500,000 UI (USD 385,000 approx.), if it is made after 1 July 2020, and there is an effective physical presence in Uruguay during the calendar year of at least 60 days; or
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directly or indirectly, in a company with a value of more than 45,000,000 UI (USD 4,900,000 approx.), which includes activities or projects that have been declared of national interest, in accordance with the provisions of the Law on the Promotion and Protection of Investments; or 15,000,000 UI (USD 1,650,000), if it is carried out as from July 1, 2020 and generates, at least, 15 new direct jobs in relation to dependence, full time, during the calendar year.
III) Establishment in the national territory the center of vital interests.
It can be accredited through all relevant documentation, such as, registration of the child or children in teaching Institution, proof of medical coverage, proof of membership in sports clubs, etc.
If the residence is to be proved through the presumption of the spouse and children, the presentation of the residence certificate of the members of the group and proof of the civil status and the filiation of the same through the testimony of corresponding items it´s enough.
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