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[ESTABLISHING A BUSINESS ENTITY IN URUGUAY]
These provisions are applicable to S.A., S.R.L, S.A.S, Trusts and non-resident entities operating in Uruguay through a Permanent Establishment, among others. 5. General Tax Information (Uruguay) Uruguay applies a source-based taxation system : taxes are levied only on activities carried out in the country, assets located in Uruguay, and rights economically exploited within its territory. Taxation of Legal Entities • Income Tax on Economic Activities (IRAE): Flat 25% on net income of Uruguayan source. Partnerships (LLCs and SAS) with annual income below approx. USD 600,000 may opt for a simplified regime based on deemed income percentages. Dividends distributed to • resident or non-resident individuals/legal entities are generally subject to a 7% withholding, provided they stem from IRAE- taxed profits. • Taxes on Agricultural Goods (IMEBA): Indirect tax on the first sale of agricultural products, at rates ranging from 0.1% to 2.5%. Small producers may use IMEBA as a final tax. • Net Wealth Tax (IPAT): 1.5% annual tax on the net worth of resident and non-resident companies located in Uruguay. Foreign assets are excluded. • Value Added Tax (VAT): Standard rate of 22%, reduced rate of 10% for certain goods and services (e.g. food, medicines, hotels). Exports are zero-rated. • Excise Tax (IMESI): Levied on the first sale or import of specific products (vehicles, fuels, tobacco, alcoholic beverages). • Corporation Control Tax (ICOSA): Annual fixed charge (approx. USD 600) applicable to
corporations, creditable against IPAT.
• Social Security Contributions (CESS): Employers and employees contribute to pensions, health insurance, and the Labor Reconversion Fund. Taxation of Individuals • Personal Income Tax (IRPF): Levied on residents’ income, divided into:
Category I (Capital Income): Includes rents, interest, dividends, capital gains. General rate 12%, with some variations and exemptions (e.g. public debt securities). Category II (Employment Income): Includes salaries and independent services. Progressive rates from 10% to 36%.
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• Wealth Tax (IPPF): Levied on individuals’ assets in Uruguay exceeding approx. USD 150,000 (doubled for family units), with progressive rates from 0,1% up to 1.5%. Taxation of Non-Residents • Non-Resident Income Tax (IRNR): Levied on Uruguayan-source income of individuals and entities without a permanent establishment. General rate of 12%, subject to variations (e.g. dividends, interest, royalties). • Non-Resident Wealth Tax (IPNR): 1.5% on net assets located in Uruguay; increased to 3% for entities in low/no-tax jurisdictions (BONT).
ILN Corporate Group – Establishing a Business Entity Series
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