Corporate - Deductions

Last reviewed - 25 August 2022

As a general rule, accrued and duly documented expenses that are necessary to obtain and preserve gross taxable income are tax deductible. On the contrary, those expenses associated with deriving or preserving income not subject to CIT are not deductible from the taxable basis. Furthermore, for CIT purposes, all costs and expenses will be subject to the compulsory proportional deduction mentioned in the Taxes on corporate income section (with some exceptions).

Depreciation and depletion

Straight-line depreciation over useful life is mandatory. Specific rates exist for the following cases: (i) 2% per year for urban buildings, (ii) 3% per year for rural buildings, and (iii) not less than 10% per year for new vehicles. Other rates are accepted if economically justified. No conformity between book and tax depreciation is required.

Percentages for depletion computed on the cost of natural resource properties are allowed in accordance with generally accepted criteria.

Depreciation and depletion percentages are computed on the historical cost of fixed assets revaluated at year-end, based on the variation of the CPI. Capital gains derived from the revaluation of fixed assets are not taxable income.


When transferring a business or a business unit, the difference between selling price and fiscal costs of the assets being transferred constitutes 'goodwill'. This goodwill constitutes an asset for the buyer and must not be depreciated, neither for CIT nor NWT purposes.

Start-up expenses

Start-up expenses should be depreciated within a period of three to five years. The taxpayer may elect the number of years to depreciate those expenses within those period limits.

Interests expenses

Interests expenses, as well as other costs and expenses, are subject to the compulsory proportional deduction mentioned in the Taxes on corporate income section.

When companies derive both income subject to CIT and either income exempt or not included in CIT (e.g. from a foreign source), interest expenses associated to the former (i.e. deductible interest) will be determined by applying a proportion based on assets.

Bad debts

As a general rule, only those debts that are at least 18 months old will be deductible as 'bad debts'. However, national rules allow deductions under some other special situations.

Charitable contributions

Deductibility of charitable contributions will depend on the organisations receiving them.

Furthermore, there is a special regime to certain charitable contributions under which the contributor may deduct 25% of the contribution and the other 75% will be recovered through credit certificates that may be used to pay taxes (with certain limitations).

Fines and penalties

Fines and penalties generated from unduly paid taxes are not deductible for CIT purposes.


CIT and NWT are not deductible.

Net operating losses

Law 19,438 (October 2016) limited the deduction of tax losses from previous years to 50% of the net tax income. However, Law 19,924 (Budget Law 2020 - 2024) eliminated this limitation. In this sense, as of the years ended on 31 December 2020, taxpayers with accumulated losses may deduct them without considering the aforementioned cap.

Payments to foreign affiliates

All accrued expenses that are necessary for the generation of Uruguayan-source income and that are duly documented are allowed as deductions. Additionally, a taxpayer may deduct expenses from its gross income if such expenses are subject to taxation (either via foreign or local taxation) in the hands of the other party. A compulsory proportional deduction must be calculated when the taxation in the hands of the counterpart is lower than 25% (CIT rate).