Specific Government incentives
Corporate income tax exemption for software and related services export activities
The 4th Title of the Consolidated Text 1996 considers exempt income, for Corporate Tax (IRAE) purposes, that which has been obtained by means of software production and services related to such, determined by the Executive Power provided that they are fully utilized abroad.
The Corporate Tax (IRAE) Regulatory Decree No 150/2007 of 26/Apr./2007, Section 163 bis includes in related services those such as hosting, call center, outsourcing, marketing and other services, whenever software is the main purpose, even when the said software has not been developed by the service provider. With regard to software, the said section includes development, implementation at client’s site, version upgrading and correction, customization (GAPs), quality testing and certification, software maintenance, training and advising.
Moreover, the same Consolidated Text 1996, Title 4 (IRAE), Section 23, Paragraph 1), allows to compute one and a half times, expenditure incurred as software services provided by those whom actually pay this tax.
Personal Data Protection.
Decree No. 414/009 dated August 31, 2009 regulates the Personal Data Protection Law No. 18331, which regulates the fundamental right to personal data protection, establishing it as an inherent right to natural persons, and creates as its controlling body the Personal Data Regulatory and Control Unit.
Thanks to these regulatory advances regarding personal data protection, Uruguay has been recognized by the European Union (EU) as a country with an adequate Protection of Personal Data in accordance with Directive 95/46/EC . This recognition enables Uruguay to meet all the EU requirements for the use of personal data, which favors the flow of data and the transfer of information from Uruguay, guaranteeing the safeguard or protection of personal data.
At international level, personal data protection is regulated in Europe by the Directive 95/46/EC, which sets forth that States that are part of the European Union can transfer data of their fellow citizens to third countries only if these countries have the level reached by Uruguay.
The promotion and development of Duty Free Zones in order to foster investments, export operations, employment and international economic integration have been declared of national interest by law. This scheme will enable the development and export of goods and services to the world free from any national tax.
Free Zones can be public or private, but in both cases they should be authorized and controlled by the National Free Zone Bureau. They are entitled to develop trading, industrialization or service provision activities. At present there are twelve Free Zones in the cities of Canelones, Colonia, Colonia Suiza, Florida, Fray Bentos, Libertad, Montevideo, Nueva Helvecia, Nueva Palmira, Punta Pereira and Rivera.
Legal entities which set up as free zone users are exempt from any current or future national tax. In particular, they are exempt from Income Tax, VAT, Wealth Tax, Excise Tax and Corporation Control Tax. Assets going in and out the duty free zone are tax-exempt. This exemption is not applicable to social security contributions, except for foreign personnel who may choose to contribute in their country of origin.