Global Tax Alert (News from Americas Tax Center) | 1 August 2014

Uruguay’s tax authorities rule all activities must be performed abroad for corporate income tax exemption

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In Ruling No. 5,810 (5 May 2014), Uruguay’s tax authorities have ruled that the corporate income tax (CIT) exemption for international trading activities will only apply if all of the activities are performed abroad or in a Special Customs Area (SCA).

In the respective case, the company is currently calculating its net taxable income for CIT purposes by using the Resolution No. 51/997 notional regime (3% of the price), which applies to:

  • Buying and selling goods abroad that do not originate in Uruguayan territory or are not destined for Uruguayan territory
  • Broker activities, which are exclusively rendered and used economically abroad

Law No. 19,149 exempts from the CIT, income from activities performed by residents abroad and in exclaves, provided the goods in transit are of foreign origin or are deposited in an SCA if those goods do not originate from or are not destined for a Uruguayan customs territory.

If the goods are destined for a Uruguayan customs territory, the exemption for international trading activities applies if such operations do not exceed 5% of the deposited or in transit goods made during that period. If this percentage is exceeded, the exemption applies only to the operations with goods not intended for a Uruguayan customs territory.

Under this ruling, the tax authorities established that the exemption for international trading activities will only apply if the activities are performed totally from abroad or within an SCA, and are related to foreign goods in which not more than 5% originated from or is destined for a Uruguayan customs territory. Consequently, the exemption will not apply to activities that can be included under Resolution No. 91/997 (international trading activities).

For additional information with respect to this Alert, please contact the following:

Ernst & Young Uruguay, Montevideo
  • Martha Roca
    +598 2 902 3147
    martha.roca@uy.ey.com
  • Rodrigo Barrios
    +598 2 902 3147
    rodrigo.barrios@uy.ey.com

EYG no. CM4630