Specific Government incentives
Promotion of biotechnological activity
Decree No. 011/013 provides for the promotion of activities that generate biotechnological products, services and processes applicable to different strategic production sectors, prioritizing the agricultural, environmental, human and animal health sectors. The Executive Branch, in consultation with the Biotechnology Sector Council, shall review said prioritization every two years and may include new sectors to be promoted in biotechnological development.
To be eligible for the benefits under the decree, at least one of the following alternatives should be satisfied: implementation of a Program for the Development of Suppliers of biotechnological products and services; the company should be a micro, small or medium sized company in the industry of biotechnological products and/or services; or it should be a new company that will produce biotechnological products and/or services.
Legislation provides for the exemption from Corporate Income Tax (IRAE, for its Spanish acronym) on income derived from promoted activities, according to the following percentages and terms:
a) fiscal years beginning between 1 January 2012 and 31 December 2017: 90%.
b) fiscal years beginning between 1 January 2018 and 31 December 2019: 75%.
c) fiscal years beginning between 1 January 2020 and 31 December 2021: 50%.
Procurement Subprogram for the Pharmaceutical Industy
Decree 194/014 creates the Government Procurement Subprogram for the Pharmaceutical Industry. It is applicable to procurements carried out by the three branches of government, the State Audit Court, the Electoral Court, Contentious-Administrative Court, departmental governments, autonomous bodies and decentralized services, public education bodies and, in general, all agencies, services and government bodies.
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.
Free Ports and Airports
The Free Port regime represents one of the mainstays for Uruguay to be positioned as a logistic platform in Mercosur and as a distribution center for goods in transit. This regime is applicable to the commercial ports of Montevideo, Colonia, Fray Bentos, La Paloma, Nueva Palmira, Paysandú and Puerto Sauce, as well as Carrasco International Airport.
When operating in a free port, goods circulate freely without the need for permits or formal procedures. During their stay at the port customs area, goods are exempt from all import taxes or import-related taxes. The following activities can be carried out:
· Merchandise-related activities: activities that, without changing its nature, can add value to the merchandise, change its presentation or implement its free disposition or destination.
· Activities related or associated to services rendered to merchandise: loading, unloading, stowage and mobilization of bulk items, transportation, transshipment, reshipment, transit, removal, deposit, storage, disposition, ship supply, ship repairs and other related services.