Global Tax Alert (News from Americas Tax Center) | 25 October 2013

Uruguay's proposed bill would modify special economic zones

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The proposed bill, dated 22 July 2013, would modify the regulations on Free Trade Zones in Uruguay.1 If this bill is approved, it will be effective 90 days after enactment.

This Tax Alert discusses the most significant proposed changes.


Free Trade Zones would be renamed Special Economic Zones. The Special Economic Zones would help promote investment, diversify production, generate employment, improve the skills of the national workforce, increase national added value, develop high technology and innovation activities and promote decentralization of economic activities and regional development. The Special Economic Zones also would generally support Uruguay's inclusion in the dynamics of international commerce of goods and services, and international investment flows.


Under the bill, Free Trade Zone exploiters would become Special Economic Zone developers. Special Economic Zone developers would invest in a zone to provide the necessary infrastructure for the installation and operation of the zone. Direct users would acquire the right to operate in a Special Economic Zone through a contract with the developer.


The Free Trade Zones users would be considered users of the Special Economic Zones. However, they would maintain all of their benefits, tax exemptions and rights under the terms agreed to under the framework of the existing regime during the term of the respective contracts and any renewals within the current term of the operating authorization of the corresponding Free Trade Zone.

Customs controls

The National Customs Administration would control the entry, stay and departure of goods from Special Economic Zones.

Transfer pricing

Special Economic Zone users should be included in the transfer pricing regime when the prices agreed to with corporate income taxpayers located outside the zone, differ from those that would have been agreed to between independent parties. This happens to be an important exception to the tax exemption that Free Trade Zone users currently enjoy, because otherwise the income from such operation would be subject to corporate income tax, and the tax exemption would not apply.


Users would be required to employ in these zones at least 75% of Uruguayan personnel in industrial and commercial activities, but only 50% for services activities.


Special Economic Zone Users would be allowed to perform activities outside the national territory, provided that such activities are necessary and complementary to those provided in the contract.

In connection with the above, the bill would allow users to carry out activities related to goods or merchandise located abroad or in transit in the country that have no origin or destination in the national territory. The bill also would allow users to carry out activities related to services provided and used economically outside the territory; however, the activities would have to be in the contract and correspond to the business plan.


Developers of Special Economic Zone placed outside the Metropolitan Area, determined by the Executive Power, would be exempt from all national tax, except the corporate income tax and Social Security Contributions.

Additionally, the salaries paid by the developers placed outside the Metropolitan Area (determined by the Executive Power) would be deducted for one and a half times their actual amount.

Thematic service zones

These would be Special Economic Zones created for activities related to a specific class of services and located outside the Metropolitan Area.

The Executive Power would have the authority to authorize the development of these areas for the following services: health care, amusement and entertainment, and audiovisual and complementary activities.

Additionally, it could make more flexible or inapplicable the restrictions on living in the zones and the prohibition against retail within the zones depending on whether the ultimate consumers could be Uruguayan or foreign residents.

Industrial activities

The development of new zones that include industrial activities in their purpose would only be authorized if they would be located outside the Metropolitan Area and if the projects would consist of investment of UI 7,000,000,000 or up (approx. US$ 920,150,000) or from UI 1,000,000,000 (approx. US$ 131,470,000) or would have the purpose to conduct activities in Uruguay that would contribute to science, technology and innovation.

Commercial and services activities

In order to authorize commercial and service activities in these zones, the Executive Power would establish minimum requirements as to the personnel employed and/or fixed assets so as to encourage the proper use of the system and compliance with Uruguay's international commitments.


1. Free Trade Zones were established by Law No. 15,921 of 17 December 1987.

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

Ernst & Young (Uruguay), Montevideo
  • Martha Roca
    +598 2902 3147
  • Rodrigo Barrios
    +598 2902 3147

EYG no. CM3915