Specific Government incentives

Engineering, design and architecture projects: Reimbursement of VAT paid when purchasing supplies

Under Decree 780/008, consulting, translation, engineering, design, architecture projects, technical assistance, training and auditing services have been included in Decree No. 220/998.

VAT paid in purchases is generally recovered by discounting VAT invoiced in sales, paying the State just the difference thereof. Since in exports (of goods and services) said tax is not  invoiced, the reimbursement of VAT included in the purchase of materials is authorized directly upon the company’s request. The Tax Administration Office (DGI) issues credit certificates  which may be used in the payment of other taxes.

Decree No 220/998 lists the transactions covered by the concept of services exports. By way of example the following are mentioned: international broadcasting of television material produced in the country, logistics support services to international cinema and TV production Architecture and engineering services companies, consultancy services provided to people abroad, services rendered to people abroad in the design, development and implementation of specific logistics support, services rendered by international call centers provided that their main activity is destined for the external market and aimed at such, data processing,  services provided for the design, development and implementation of digital contents, market and social research services, and advertising services rendered by advertising agencies to customers overseas.

Free Zones

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.