Tax Information Exchange Agreements (TIEAs) provide for the exchange of information on tax matters and Uruguay has concluded TIEAs with various countries, including Australia, Chile, Canada, Denmark, the Faroe Islands, France, Greenland, Guernsey, Iceland, Norway, the Netherlands, Sweden, South Africa, and the United Kingdom.
Uruguay has agreed to exchange tax rulings with eligible jurisdictions from 1 April 2018 in the implementation of BEPS Action 5. A specific ruling can be exchanged with a relevant jurisdiction if it is international in nature and affects the relevant jurisdiction. The exchange is possible if there is an agreement between Uruguay and the relevant jurisdiction providing for the spontaneous exchange of tax information. The agreement can be a tax information exchange agreement (TIEA), a tax treaty, or the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters. Exchange is also required for “historical” rulings granted between:
- 1 January 2016 and 31 March 2018; or
- 1 January 2014 and 31 December 2015, provided they were still in effect as of 1 January 2016.
Uruguay acceded to the OECD Mutual Assistance Convention as amended and the convention entered into force for Uruguay on 1 December 2016. Effective September 2018, Uruguay has signed the Common Reporting Standard (CRS) Multilateral Competent Authority Agreement and adopted measures to implement the automatic exchange of financial account information in accordance with the global standard for exchange of information developed by the OECD under the CRS.
Effective from 1 January 2017, the government has introduced a number of measures in relation to entities that are resident, domiciled, or incorporated in low or no tax jurisdictions, or subject to special tax regimes, such as:
- Transactions carried out with low tax entities will be considered controlled for transfer pricing purposes, regardless of whether the parties are related or not;
- Income from the transfer of shares or other equity participation in low tax entities will be considered Uruguayan source income if at least 50% of the value of the entity's assets is derived from assets in Uruguay;
- Low tax entities are subject to an increase in the non-residents tax rate from 12% to 25%;
- Capital gains derived by a low tax entity from the alienation of immovable property situated in Uruguay are subject to the standard tax rate of 25% plus an additional tax of 5.25%;
- Income derived by a low tax entity from the sale of goods located in Uruguay are subject to tax on deemed net income equal to 30% of the sales price; and
- Individuals resident in Uruguay with direct or indirect participation in a low tax entity will have the investment income and capital gains of the entity allocated to them as a deemed dividend or profit distribution in proportion to their participation percentage.
The criteria for low or no tax jurisdictions and tax regimes include:
- Income from activities performed, goods located, or rights economically used in Uruguay are taxed at an effective rate lower than 12% in such jurisdiction or under such regime; and
- There is no tax information exchange agreement or tax treaty with the exchange of information provisions with such jurisdiction, or there is no effective exchange of information.
The list of low or no tax jurisdictions and regimes effective 21 February 2022 includes 36 jurisdictions as follows:
|Angola||Falkland Islands||Kiribati||Palau||Swaziland (Eswatini)|
|Antigua and Barbuda (removed effective 21 February 2022)||Fiji||Labuan||Pitcairn Island||Tokelau|
|Ascension Island||French Polynesia||Liberia||Puerto Rico||Tonga|
|Brunei (removed effective 21 February 2022)||Guam||Maldives||Saint Helena||Tristan da Cunha|
|Christmas Island||Guyana||Niue||Saint Pierre and Miquelon||Tuvalu|
|Cocos (Keeling) Islands||Honduras||Norfolk Island||Sint Maarten (former member of the Netherlands Antilles)||U.S. Virgin Islands|
|Dominica (removed effective 21 February 2022)||Jordan||Pacific Islands||Svalbard|
Grenada was added to the list of low or no tax jurisdictions and regimes for the year ending 31 December 2020 and was removed from the list for the year beginning from 1 January 2021.
Resident entities and non-resident entities that have a permanent establishment or place of effective management in Uruguay are required to identify and report their ultimate beneficiaries. Ultimate beneficiaries include individuals that directly or indirectly hold at least 15% of the capital or voting rights of the entity or otherwise exercise ultimate control. The obligation applies for resident public limited companies, partnerships limited by shares, trusts and investment funds, limited liability companies, and several other entity types, although certain exemptions apply.
With respect to non-resident entities (regardless of legal form), the obligation applies to:
- Entities with a permanent establishment in Uruguay;
- Entities with their place of effective management in Uruguay; and
- Entities that hold assets in Uruguay in excess of 2.5 million indexed units i.e., Unidad Indexada which are multiple of pesos adjusted for inflation based on the value of the indexed units as at the end of the previous year.
Where there is a change in ownership information, altering the percentage of participation, the change should be reported within 30 days (90 days if ultimate beneficiaries are non-resident).