Taxing authority and tax law
Tax authority: General Tax Direction (Dirección Nacional Impositiva — DGI)
Tax law: Income Tax Law and Regulations
Relevant regulations and rulings
Transfer pricing documentation requirements have been in effect in Uruguay since 1 July 2007 (following Law #18.803) but they were not regulated until 26 January 2009 with the publication of Decree # 56/009 with modifications made by Decree #392/009.
DGI issued on 1 December 2009 Resolution # 2.084/009 (with the modifications introduced by Resolution # 819/010 and #2.098/009) which defined concepts and established which requirements a transfer pricing report must follow.
OECD guidelines treatment
Uruguay is not an OECD member and the OECD Transfer Pricing Guidelines are not mentioned in Uruguay’s Income Tax Law and Regulations.
Priorities/pricing methods
The Law establishes that in order to determine the market value, one of the following methods should be applied: Comparable Uncontrolled Price, Resale Price, Cost Plus, Profit Split and Transactional Net Margin Methods. For the application of the transfer pricing methods, the comparability analysis and justification for such prices may be indistinctly performed on the local or foreign party’s situation. If the foreign party’s situation is chosen, certified documented evidence will be required in the country of origin, issued by a firm of well known independent auditors, duly translated and authenticated.
Uruguayan Law does not prioritize methods. However, for transactions involving imports or exports of goods with well known prices in transparent markets, those prices must be used. If the transactions mentioned before are performed through international intermediaries who are not the final consignees of the goods, the applicable price is the price in the respective market. The price to be used is the one on the respective market on the day of the shipment or the price on the day of the contract if it was registered in the Mercantile Office. It is important that if the contract has been registered, it is mandatory to use the price of the day of the contract.
Transfer pricing penalties
Since there are no special penalties for failure to file transfer pricing returns, general tax penalties are applicable. Penalties for not filing Form 3001 in due time are UYU260 (approximately US$13).
When there exists underpayment due to transfer pricing, the taxpayer is penalized with a tax omission fine that starts on 5% if it is paid before the fifth day after the deadline, 10% if it is paid between the five and 90 days after the deadline, and 20% if it is paid after 90 days past the deadline. In each case, corresponding surcharges are added.
If the company is accused of tax fraud the fine ranges from 100% to 1,500% of the unpaid tax. The penalty is determined by the DGI according to the circumstances of each case.
It is important to remark that if DGI requires a TP study and a company does not file it, DGI can suspend the certificate that shows that the taxpayer fulfilled his tax obligations. The immediate consequence of which bars the taxpayer from being able to import or obtain a bank loan.
Penalty relief
There are no provisions for reductions in penalties.
Documentation requirements
Taxpayers who fall under one of the following categories are obliged to file a TP study and the TP annual return (Form 3001) with the tax authorities:
- The amount of the transactions subject to the TP rules is higher than 50 million units (approximately US$5m)
- Registered as Great Taxpayer
- Received a request for filing from the tax authorities
Documentation deadlines
Four months after the fiscal year end the income tax return is due. In this filing, the company must disclose whether a TP adjustment is needed to have arm’s length prices in its transactions with related parties and unrelated parties located in tax havens. Thus, the TP analysis should be performed by that time, even though the documentation is not due until later (nine months after fiscal year end).
Nine months after fiscal year end:
- TP annual return (Form 3001) including detailed information of all cross-border intercompany transactions (or those performed by the local company with entities located in tax havens)
- TP study (Regs. 2.084/009), to be filed together with Form 3001
Statute of limitations on transfer pricing assessments
There are no specific limitations and the general regime applies. Assessments can be raised five years after the company’s accounting period ends, but this is extended to 10 years where the difference is due to fraudulent or negligent conduct by the taxpayer.
Return disclosures/related-party disclosures
Taxpayers are required to file:
- The TP study with key elements, such as the functions and activities of the company, risks and assets used, the methods used, the interquartile range, details of the comparables, etc.
- Annual tax return Form 3001
Audit risk/transfer pricing scrutiny
September 2009 was the first time that taxpayers had to file a TP study so there is no background on TP audits yet.
APA opportunity
APAs are not specifically addressed.
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