The Uruguayan government issued a decree establishing conditions under which a country, jurisdiction, or tax regime will be treated as a “low-tax” or “no-tax” jurisdiction for Uruguayan tax purposes. The decree (issued 13 February 2017) helps establish whether a foreign legal entity will be subject to the increased tax rates recently introduced in an effort to address tax avoidance through structures that involve low-tax or no-tax jurisdictions.
Uruguay recently passed Law No. 19.484—a fiscal transparency law establishing a number of measures (e.g., increased income tax rates, exceptions to the territorial principle, CFC rules)—aimed at discouraging the use of entities in low-tax or no-tax jurisdictions.
The decree defines the concept of “low-tax” or “no-tax” jurisdictions to provide that a foreign entity will be subject to the fiscal transparency law if the following two conditions are met:
The decree also provides the Uruguayan tax administration with the authority to develop a list of countries, jurisdictions, and tax regimes that satisfy these conditions.
The decree is effective 1 January 2017. However, the applicable legislation (i.e., the fiscal transparency law) provides a grace period until 30 June 2017, during which certain corporate restructuring or similar transactions that are implemented by taxpayers in order to exclude the use of entities in low-tax or no-tax jurisdictions will benefit from tax exemptions and certain other advantages (e.g., simplified procedures with respect to re-domiciliation to Uruguay).
For more information, contact a tax professional with KPMG’s Latin America Markets practice or with the KPMG member firm in Uruguay:
Devon M. Bodoh | +1 (202) 533 5681 | firstname.lastname@example.org
Alfonso A-Pallete | +1 (305) 913 2789 | email@example.com
Luis A. Aisenberg | +598 29024546 | firstname.lastname@example.org
Gustavo Melgendler | +598 29024546 | email@example.com
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