Investment in Uruguay, both national and foreign is declared of national interest by law. Thus, foreign investors enjoy the same incentives as local investors, there is no discrimination from a tax standpoint and there are no restrictions for the transfer of profits abroad.
Uruguay offers several incentives that can be adapted to different types of activities, whether they are industrial, commercial or service activities to be carried out in the country. Among the main incentive regimes available are the following:
These are national and foreign investments in the country whose promotion and protection are declared of national interest. They may come from different areas: industrial, agro-industrial, tourism and general services.
See below a simulator of tax benefits for investment projects in order to apply to the Investment Promotion Law.
The objective of the process is to carry out the necessary controls and follow-up to verify the continuity of the investment projects that received the tax exemption.
The process is carried out annually when the deadline for submitting the control and follow-up documentation expires.
The investment projects have up to 4 months after the closure of the fiscal year to submit this paperwork. It ends when: the received documentation has been processed or when actions are taken due to the non-compliance with the control and follow-up of the project.
Presentation for the extension of projects under regime Decree 2/012.
Access the needed documentation to carry out the procedure for presenting the project extension regime Decree 455/007.
Another regime used by investors is the Free Trade Zone Act. These are areas where national taxes (current or future) are not paid, and the government is the sponsor of this exemption (aside from contributions to Social Security).
These allow the development of commercial, industrial or service activities. Users may provide services to foreign countries, and in some cases, to Uruguay.
Companies authorized to operate from Free Trade Zones may be individuals or legal entities under any corporate form. As for legal entities, there are no restrictions regarding its form, but they must have a single purpose. There is no distinction between domestic or foreign investment and the latter are not obligated to comply with any special process or requirement.
In terms of personnel, up to 25% may be foreigners (and in the case of service companies the number reaches 50%). Goods may be kept indefinitely in these premises and their destination may change at any given time.
The Free Ports and Airports regime is one of the pillars through which Uruguay positions itself as a logistics platform in the Common Market of the South (Mercosur), and as a distribution center for goods in transit.
Montevideo is the first terminal on South America’s Atlantic coast to operate under the Free Port system, while Carrasco International Airport is the only free multi modal airport in South America. This system also applies to the commercial ports of Colonia, Fray Bentos, La Paloma, Nueva Palmira, Paysandú and Puerto Sauce.
Goods are exempt from all import duties and taxes and do not lose their origin, whether they are re-exported under identical conditions to their import nor if they are subject to operations that do not alter the nature of the product.
Authorized activities: The activities carried out in said port shall not imply alterations to the nature of the product or goods and shall be limited to warehouse, repacking, relabeling, classifying, grouping and separating, consolidating and separating, handling and fractioning operations.
This regime applies to both product and service trading operations, as long as certain conditions are met:
The company must also have a physical presence in the country and prove its existence.
Tax regime: In Uruguay, the Income Tax on Economic Activities (IRAE) is of 25%. For trading operations, the application of the special regime first applies 3% to the difference between the sale price and purchase price of the operation and then applies the 25% IRAE rate to the result instead of taxing at the 25% income rate. Thus, the effective income rate is of 0.75%.
Regulation: Resolution N° 51/997.
Law N° 19,784 declares Industrial parks (PI) and Scientific-Technological Parks (PCT) to be of national interest, defined as the fraction of public or private land authorized by the Executive Power, equipped with infrastructure for the development of industrial, service and training, investigation and innovation activities. Companies settled in industrial parks and scientific-technological parks may access, according to the user type, the following benefits (Decree 268/020).
Additional IRAE exemption
Companies that submit investment projects and are authorized as park users obtain an additional benefit of 15% in the IRAE exemption and in the term to benefit from said exemption with regards to what would apply in terms of the score obtained by the investment project as sponsored by the Executive Power, provided that they carry out any of the following activities:
Regarding the other companies approved as industrial park and scientific-technological park users, the increase referred to previously will be 5%.
Tax credit for pension contributions by employers
Additionally, the authorized users of industrial and/or scientific-technological parks that carry out industrial activities and those that perform operations in storage, conditioning, selection, sorting, fractioning, assembly, disassembly, handling or mixing products or raw materials, provided that they are exclusively associated to the industrial activities established in the parks, will have a tax credit for the pension contributions by employers in relation to the amount of positions defined on the employment creator indicator of the promoted investment project.
The temporary customs admission allows companies to import raw materials and supplies without paying import duties, as long as they are used to produce goods that will be exported within a period of up to 18 months.
The temporary customs admission regime is governed by Law Nº 18,184 having been set by Decree 505/009. In order to allow the re-export or nationalization of the goods in the state in which they were introduced, a prior authorization from LATU is required.
This regime also offers stock-taking and draw-back mechanisms. The stock-taking mechanism consists of relocating imported goods under the general system with the import of similar goods, free of duties and taxes, when they have been used as supplies for the transformation of exported products in the country. The draw-back mechanism allows the possibility of claiming the reimbursement of duties and taxes paid for the import under the general system of goods which, by definition, may be imported under temporary customs admission and that were used in the country in order to manufacture products intended for export.
Export tax refund implies a restitution of 3% to 6% of the exported FOB value as long as the goods reach a minimum national added value of 20%.
Companies interested in making use of this benefit must submit an application to the Ministry of Economy and Finance (MEF) that is signed by the owner or representative of the company. Once the MEF receives all the necessary documentation, it will then evaluate the application according to Decree 487/997 and its associated regulations.
These are national and foreign investments in the country whose promotion and protection are declared of national interest. They may come from different areas: industrial, agro-industrial, tourism and general services.
See below a simulator of tax benefits for investment projects in order to apply to the Investment Promotion Law.
The objective of the process is to carry out the necessary controls and follow-up to verify the continuity of the investment projects that received the tax exemption.
The process is carried out annually when the deadline for submitting the control and follow-up documentation expires.
The investment projects have up to 4 months after the closure of the fiscal year to submit this paperwork. It ends when: the received documentation has been processed or when actions are taken due to the non-compliance with the control and follow-up of the project.
Presentation for the extension of projects under regime Decree 2/012.
Access the needed documentation to carry out the procedure for presenting the project extension regime Decree 455/007.
Another regime used by investors is the Free Trade Zone Act. These are areas where national taxes (current or future) are not paid, and the government is the sponsor of this exemption (aside from contributions to Social Security).
These allow the development of commercial, industrial or service activities. Users may provide services to foreign countries, and in some cases, to Uruguay.
Companies authorized to operate from Free Trade Zones may be individuals or legal entities under any corporate form. As for legal entities, there are no restrictions regarding its form, but they must have a single purpose. There is no distinction between domestic or foreign investment and the latter are not obligated to comply with any special process or requirement.
In terms of personnel, up to 25% may be foreigners (and in the case of service companies the number reaches 50%). Goods may be kept indefinitely in these premises and their destination may change at any given time.
The Free Ports and Airports regime is one of the pillars through which Uruguay positions itself as a logistics platform in the Common Market of the South (Mercosur), and as a distribution center for goods in transit.
Montevideo is the first terminal on South America’s Atlantic coast to operate under the Free Port system, while Carrasco International Airport is the only free multi modal airport in South America. This system also applies to the commercial ports of Colonia, Fray Bentos, La Paloma, Nueva Palmira, Paysandú and Puerto Sauce.
Goods are exempt from all import duties and taxes and do not lose their origin, whether they are re-exported under identical conditions to their import nor if they are subject to operations that do not alter the nature of the product.
Authorized activities: The activities carried out in said port shall not imply alterations to the nature of the product or goods and shall be limited to warehouse, repacking, relabeling, classifying, grouping and separating, consolidating and separating, handling and fractioning operations.
This regime applies to both product and service trading operations, as long as certain conditions are met:
The company must also have a physical presence in the country and prove its existence.
Tax regime: In Uruguay, the Income Tax on Economic Activities (IRAE) is of 25%. For trading operations, the application of the special regime first applies 3% to the difference between the sale price and purchase price of the operation and then applies the 25% IRAE rate to the result instead of taxing at the 25% income rate. Thus, the effective income rate is of 0.75%.
Regulation: Resolution N° 51/997.
Law N° 19,784 declares Industrial parks (PI) and Scientific-Technological Parks (PCT) to be of national interest, defined as the fraction of public or private land authorized by the Executive Power, equipped with infrastructure for the development of industrial, service and training, investigation and innovation activities. Companies settled in industrial parks and scientific-technological parks may access, according to the user type, the following benefits (Decree 268/020).
Additional IRAE exemption
Companies that submit investment projects and are authorized as park users obtain an additional benefit of 15% in the IRAE exemption and in the term to benefit from said exemption with regards to what would apply in terms of the score obtained by the investment project as sponsored by the Executive Power, provided that they carry out any of the following activities:
Regarding the other companies approved as industrial park and scientific-technological park users, the increase referred to previously will be 5%.
Tax credit for pension contributions by employers
Additionally, the authorized users of industrial and/or scientific-technological parks that carry out industrial activities and those that perform operations in storage, conditioning, selection, sorting, fractioning, assembly, disassembly, handling or mixing products or raw materials, provided that they are exclusively associated to the industrial activities established in the parks, will have a tax credit for the pension contributions by employers in relation to the amount of positions defined on the employment creator indicator of the promoted investment project.
The temporary customs admission allows companies to import raw materials and supplies without paying import duties, as long as they are used to produce goods that will be exported within a period of up to 18 months.
The temporary customs admission regime is governed by Law Nº 18,184 having been set by Decree 505/009. In order to allow the re-export or nationalization of the goods in the state in which they were introduced, a prior authorization from LATU is required.
This regime also offers stock-taking and draw-back mechanisms. The stock-taking mechanism consists of relocating imported goods under the general system with the import of similar goods, free of duties and taxes, when they have been used as supplies for the transformation of exported products in the country. The draw-back mechanism allows the possibility of claiming the reimbursement of duties and taxes paid for the import under the general system of goods which, by definition, may be imported under temporary customs admission and that were used in the country in order to manufacture products intended for export.
Export tax refund implies a restitution of 3% to 6% of the exported FOB value as long as the goods reach a minimum national added value of 20%.
Companies interested in making use of this benefit must submit an application to the Ministry of Economy and Finance (MEF) that is signed by the owner or representative of the company. Once the MEF receives all the necessary documentation, it will then evaluate the application according to Decree 487/997 and its associated regulations.
