Uruguay Tax Overview

Tax deductions can apply to individuals for employment expenses, self-employment deductions, and capital investments deductions. Other deductions may be applicable depending on what kind of income is being taxed. 
Uruguay Tax Overview
When looking to outsource business operations to another country, it’s vital to understand the ways taxes differ in those places. The consequences of not researching tax practices can range from simple fines to criminal repercussions. Here, you’ll find a complete overview of the tax practices in Uruguay for both individuals and corporations.  SERVIAP can help with your global expansion needs. Contact us today to learn how you can expand your business with PEO in Uruguay. 

Uruguay Personal Taxes 

Here’s everything you need to know about personal taxes in Uruguay: 

Who is Taxed? 

Any individuals generating income within Uruguay are subject to taxes. Make note that there are certain circumstances when non-residents generating income outside of Uruguay may still be taxable under Uruguayan tax law.  

What is the Tax Rate? 

The tax rate varies based on gross annual income. The tax brackets are as follows, all amounts being reported in Uruguayan pesos: 
  • Up to 409,080 – 0% 
  • Between 409,080 and 584,400 – 10% 
  • Between 584,400 and 876,600 – 15% 
  • Between 876,600 and 1,753,200 – 24% 
  • Between 1,753,200 and 2,922,000 – 25% 
  • Between 2,922,000 and 4,383,000 – 27% 
  • Between 4,383,000 and 6,720,600 – 31% 
  • 6,720,600 and above – 36% 
These taxes can be paid as individuals or as a family unit. Keep in mind that family unit tax brackets may look a bit different. 

National vs. International Income 

Taxes applied to Uruguayan-sourced income also differ based on residency. Residents follow the tax rate listed above; non-residents’ gross income varies from 7% to 25%.  Though taxes are only applied to Uruguayan income, certain income can be defined as Uruguayan, even if it was technically generated by outside sources.  Technical services, for example, are considered Uruguay-sourced and taxable if the income generated from these services falls under the taxable income classification according to Uruguayan tax law.  

Capital Gains, Exemptions & Other Considerations 

Tax deductions can apply to individuals for employment expenses, self-employment deductions, and capital investments deductions. Other deductions may be applicable depending on what kind of income is being taxed. 

Uruguay Corporate Taxes 

Here’s everything you need to know about corporate taxes in Uruguay: 

Who is Taxed? 

All corporations operating within Uruguay, regardless of residency, are subject to taxes on Uruguayan sourced income. Uruguay only taxes income generated within its borders, but there are certain circumstances where the income derived outside of Uruguay by non-residents are considered taxable under Uruguay tax law. 

What is the Tax Rate? 

The tax rate for corporations in Uruguay is 25%.   What is Taxable Income? Taxable income is defined as the sum of inventory valuation, capital gains, interest income, royalty income, and exceptions on certain foreign source income. Dividend income and any foreign source income that doesn’t fall under these exceptions are considered tax-exempt. Tax Incentives & Deductions There are several potential tax credits and incentives, the most common being:  
  • VAT reimbursement on local goods for civil construction 
  • VAT and tax exemptions 
  • Temporary exemptions for construction work 
  • Any assets directly associated with developing agriculture or farming services.  
Tax incentives vary significantly depending on the business being performed within Uruguay. 

Uruguay VAT Taxes 

Value-added taxes, better known as VAT taxes, are a common form of consumption tax. The value-added portion is the difference between a business’ sales and its cost of purchasing services or goods from another business. Here’s what you need to know about VAT taxes in Uruguay: 

Who is Taxed? 

Anyone purchasing goods or services within Uruguayan territory. This tax applies to the import of certain goods as well. 

What is the Tax Rate? 

The tax rate is generally 22%.  These goods are taxed at a reduced 10%: 
  • Food and medicines 
  • Hotel services 
  • Health services 
  • The first sale of immovable assets, such as real estate 
 The following goods are completely VAT exempt: 
  • Milk 
  • Books 
  • Magazines 
  • Farming and agricultural machines 
  • Certain bank services 
  • Accessories 
Exports are also VAT exempt. VAT on purchases of exports can be recovered as certificates that can be used for a variety of money-saving benefits, such as paying other taxes or Social Security contributions. 

Is Uruguay Right for Your Business? 

SERVIAP is a leading Professional Employer Organization (PEO) ready to help your business expand operations throughout the Western Hemisphere. PEO is a model of co-employment, where we assume total responsibility for your talent, allowing you to focus on the strategic activities of your organization. Contact us today to learn more about how you can expand your business in Uruguay. Contact Us 

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