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Uruguay: Taxation of the digital economy, implementing decree

Uruguay: Taxation of the digital economy

The government of Uruguay on 24 May 2018 issued a decree that concerns the tax treatment of the digital economy, and these measures will affect multinational corporations operating in the digital economy space or providing digital economy services in Uruguay.


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The new decree effectively implements rules introduced by Law 19.535 (effective 1 January 2018) for the tax treatment of foreign companies doing business in Uruguay by means of transactions conducted via the internet, IT platforms or software applications (among others). Under these measures, there were certain exceptions introduced to Uruguay’s territorial system, with such services being subject to income tax and value added tax (VAT) in Uruguay even if the services are provided from a foreign jurisdiction. Law 19.535 defines the following services that are subject to tax as including:

  • Mediation or intermediation services conducted through electronic means when one or both parties providing the “core” service (e.g., transportation, accommodation, etc.) are located in Uruguay (the tax base will be 50% of the transaction if only one of the parties is based in Uruguay)
  • Digital services (as defined above) directly provided to Uruguayan customers

Implementing decree

The implementing decree (24 May 2018) provides additional information with respect to the tax rules introduced by Law 19.535. In general, the decree provides the factors used to determine the location of parties receiving the services will be:

  • The internet protocol (i.e., the “IP address”) of the device used for “hiring” or purchasing the service
  • The invoicing address of the client

If either of these factors cannot be verified, the service will be considered to have been rendered in Uruguay if paid via electronic means in Uruguay (e.g., by credit card, bank account transfers, etc.)

The decree further provides the definition of “mediation” and “intermediation services” will be determined on the follows basis:

  • Those that given their nature, are “automatized,” require minimum human intervention, and are not feasible without information technologies
  • Those that imply an intervention, direct or indirect, between the supply and the demand of the service being provided (“core” service)

The decree also addresses the inclusion of audiovisual services. Specifically, the decree clarifies that those services provided directly by electronic means will include only audiovisual services (that is, content produced on the basis of sounds, images or moving images (video), separately or in combination, whether synchronized or not). Under the decree, the rules for withholding agents for audiovisual services clarify that the recipients of the services will be responsible to act as a withholding agent. In relation to mediation or intermediation services provided from a foreign jurisdiction (as defined above), the requirement to withhold is suspended. 

The decree also sets out simplified procedures for tax registration. When the foreign taxpayer is responsible for taxes and must be registered locally (e.g., when the applicable laws and regulations have not established who is the withholding agent), the decree authorizes the tax administration to establish certain simplified procedures. These may include items such as not requiring the appointment of a local representative or measures about not having to declare a fiscal domicile in Uruguay. The tax administration may also establish exceptions from formal requirements that generally apply for tax purposes for commercial documents. 


For more information, contact a tax professional with KPMG’s Latin America Markets practice or with the KPMG member firm in Uruguay:

Alfonso A-Pallete | +1 (305) 913 2789 |

Luis A. Aisenberg | +598 29024546 |

Gustavo Melgendler | +598 29024546 |

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