In Uruguay, the special tax regime applicable to trading in goods and services, to and from abroad, is set out in Resolution No. 51/997, which establishes a notional (deemed) method for determining the net income subject to IRAE.
Prior legal framework: before Law No. 18,083 came into force, Uruguay applied the IRIC (Income Tax on Industry and Commerce), which treated as Uruguayan-source income any income derived from activities carried out in the country, regardless of the nationality or domicile of the parties involved or the place where the transaction was executed.
Ruling No. 2,280 (1984) distinguished between transactions entered into and performed abroad, which were treated as foreign-source income, and those carried out in Uruguay, which were treated as local-source income, even where the goods never entered the country.
Ruling No. 3,410 (1994) introduced the concept of "mixed income" for transactions in which the productive factors were combined both in Uruguay and abroad; only the portion attributable to Uruguay was subject to IRIC.
Resolution No. 51/997 established a notional regime for certain intermediation activities carried out in Uruguay: the purchase and sale of goods located abroad, without Uruguay as their origin or destination; and intermediation in the rendering of services provided and used outside Uruguay. Uruguayan-source net income is set at 3% of the difference between the sale price and the purchase price. Taxpayers may choose between this notional regime and the determination of actual income. Since IRAE is levied at a rate of 25%, the effective rate on gross income is 0.75%.
Trading and domestic-market operations: in Ruling No. 4,685, concerning a company that combined trading activities with domestic-market sales, the DGI (national tax authority) held that: direct trading expenses are not deductible against income from domestic-market operations; indirect financial expenses (attributable to trading assets) give rise to non-taxable income; and indirect operating expenses (attributable to trading income) likewise give rise to non-taxable income.
In summary, the regime provides a competitive and efficient tax framework, with a low tax burden, flexibility and simplicity in its settlement, making it attractive for companies seeking to optimize their tax structure without a physical presence in the country. At MECOL ESTUDIO we are available to advise you and help maximize the benefits of this regime.
