INCOME TAXES ON CORPORATIONS
1. Rates
The unique annual income tax rate is 30%. Corporations and branches of foreign companies are taxed in Uruguay on their annual local-source income. Uruguayan tax legislation is based on the source principle.?Therefore, income derived from activities performed in Uruguay, assets located in Uruguay, or rights utilized in Uruguay are taxable.
2. Local Income Taxes
There are no state or provincial taxes on income in Uruguay.
3. Capital Gains Taxes
There is no separate capital gains tax in Uruguay. Capital gains are treated as ordinary income. (See item 6.)
4. Branch Profits Taxes
There are no significant differences between the tax treatment of a branch and a local corporation with the exception of the treatment of interest or other charges paid by the local establishment to its overseas head office or shareholders. Branches are not allowed to deduct these expenses, whereas corporations are (see item 1).
5. Foreign Tax Reliefs
There is no provision for foreign tax relief.
6. Classification of Corporations
All companies are taxed on their Uruguayan-source income.
q Agricultural and cattle-raising income is taxed in a special way (see item 33);
q Industrial, commercial, and services income is determined and taxed at the company level;
q Stock companies and branches of foreign companies, and public industrial, commercial, and services companies are taxed on their total local-source income;
q Partnerships (nonstock companies) and unipersonal companies are taxed only on income obtained from the combination of both capital and work. Neither capital gains nor income derived from activities that mainly involve labor are taxed in this case.
7. Payment of Taxes
Income tax contributors are required to make 12 monthly prepayments toward their income tax liabilities. Each of the payments is equivalent to:
Last year income tax
x monthly gross income
Last year gross income
If the annual cumulative amount of prepayments exceeds the income tax, the Tax Authority recognizes a tax credit for the difference.
The income tax is determined annually by each contributor. The annual tax return is filed with the Tax Authority in the fourth month after the closing date of the fiscal year, which is also the deadline for paying any income tax due.
8. Other Matters
Besides the annual income of companies, the income tax applies also to:
q Royalties paid or credited by income taxpayers to nonresidents or to local noncontributors of the annual income tax;
q Fees for technical assistance paid or credited by income taxpayers to nonresidents these fees are exempt if they are taxed in the nonresident country and this country does not recognize a tax credit for the tax that would have to be paid in Uruguay;
q Dividends or profits paid or credited to nonresident
shareholders or head offices, only if they are taxed in the nonresident country and this country recognizes a tax credit for the tax paid in Uruguay;
Dividends and profits are exempt if, although the above conditions are satisfied, the foreign receiving company cannot take advantage of the tax credit because of negative fiscal income.
In any of the above-mentioned situations, the local company that makes the payment or credit must withhold the income tax due by the nonresident beneficiary.
INCOME TAXES ON INDIVIDUALS
9. Rates
There is no tax on personal income in Uruguay. However, agricultural or cattle-raising income and industrial, commercial, or services income are taxed at the company level, even if the owner of the farm or company is an individual (unipersonal company) (see items 6 and 33).
Tax on commissions is an exception to the above mentioned (see item 25).
INCOME TAXES ON NONRESIDENTS
15. Liability to Tax
Uruguayan income tax applies to Uruguayan-source annual income obtained either by residents or nonresidents (see item 1). It also applies to income earned by nonresidents for royalties, technical assistance fees, dividends, and profits paid by local income taxpayers in certain situations (see item 8).
17. Withholding Tax Rates
The withholding income tax rate is 30%. This rate applies to all income tax withholdings with the exception of those applied to profits remitted abroad. In this case, the
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