Uruguay: Tax relief measures, extended tax benefits for investment projects (COVID-19)
Uruguay: Tax relief measures, extended tax benefits
The Uruguayan Parliament passed Law No. 19,942 (published in the official gazette on 26 March 2021) to provide benefits aimed at supporting micro and small businesses that have encountered financial challenges stemming from the coronavirus (COVID-19) pandemic.
In addition to granting certain relief authority to the tax administration, the law specifically includes the following relief measures.
Tax exemptions (social security)
- Relief from 50% of the employer's social security (retirement) contributions accrued between 1 January 2021, and 30 June 2021. To be eligible for this relief, there are certain conditions that must be satisfied:
- The business had, on average, during 2020, 19 or more employees—for this purpose, workers covered by subsidies provided by the BPS (social security administration) and the BSE (state insurance bank); directors of SAs (corporations) and directors, administrators, and legal representatives of SAS (simplified stock companies), and ‘worker members” of labor and social cooperatives are to be counted.
- The business had income for the most recently ended fiscal year (the year prior to enactment) not exceeding 10 million IU (Indexed Units) as measured t at the end of the fiscal year. Businesses that are not on the calendar year and have a year-end other than 31 December can consider its income corresponding to the 2020 calendar year under the conditions determined by the regulations.
- Relief from 50% of the employer’s social security (retirement) contributions accrued between 1 April 2021 and 30 June 2021—for businesses that are not eligible for the relief under the provisions described above and also that are engaged in the following activities and services: school transport, school canteens, event organizers (whether having premises or not), organization and holding of national and international congresses or fairs, travel agency, ground transportation (tourist groups and excursions), concessionaires at the international airports of Carrasco and Laguna del Sauce, air and river transportation of passengers operating Uruguay, movie theaters and film distribution, and certain hotels and restaurants.
Monotax (the tax collection regime for certain micro and small enterprises)
- Those taxpayers eligible under the Monotax regime and that started their business activities beginning on or after 1 January 2021 (but not activities restarted following a COVID-related lockdown) may gradually engage in the Monotax regime using the following percentages: 25% during the first 12 months of registered activity; 50% during the second 12 months of registered activity; and 100% from the third 12 months of registered activity.
- Those taxpayers already operating under another tax beneficial regime are not eligible. The taxpayer, on launching its business activities, can choose between the Monotax regime and the bonus regime for “good payers.” As with the Social Mides Monotax regime, if the payment of the Monotax missed for two consecutive months, the BPS will automatically suspend the Monotax registration.
Business income tax
- Relief from monthly payments for IRAE (the income tax on economic activities) accrued in the period between 1 January 2021 through 30 June 2021. Eligible taxpayers had gross taxable income for the prior fiscal year not exceeding the equivalent of 915,000 IU.
Relief available to be granted by the tax administration
- Regarding individual (personal) income tax owed by salaried workers and employees, for the period 1 May 2018 through 23 March 2021, the BPS may allow the tax to be paid in installments over a period of 36 payment periods without penalty or surcharges.
- Other payments can be made in up to 72 monthly installments plus interest at an annual rate of 2%--including amounts paid to the pension savings fund (AFAP), for employer tax debts (including FONASA) accrued from 1 May 2018 through 23 March 2021, and for certain taxpayers included in the Monotax regime with accruals before 23 March 2021.
- The tax administration (DGI) also has authority to grant payment relief for amounts owed for tax liabilities if not involving fraud.
- Regarding the wealth tax, relief may include a reduction of the tax.
Temporary extension of tax benefits for investment projects
Decree No. 94/2021 (23 March 2021) concerns a temporary extension of certain tax benefits applicable to investment projects.
Those engaged in eligible investment projects can claim the following IRAE tax benefits:
- For investments made between 1 April 2020 and 31 March 2021—a tax benefit equal to 150% of the value of the investment
- For investments made between 1 April 2021 and 30 September 2021—a tax benefit equal to 130% of the value of the investment
For more information, contact a tax professional with the KPMG member firm in Uruguay:
Felipe Martínez Falco | +598 2902 45 46 | firstname.lastname@example.org
Gustavo Melgendler | + 598 2902 45 46 | email@example.com
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