Uruguay

All Uruguayan-sourced income obtained by non-residents (other than those obtained through a PE in Uruguay) is taxed at flat rates of up to 12% on gross income, with some exceptions. This tax is basically collected by way of WHT.

The exceptions are as follows:

• Interest on deposits in local currency is taxed at rates from 0.5% to 10%, depending on their terms.
• Interest on deposits in foreign currencies for terms exceeding one year is taxed at rates from 7% to 12%.
• Interest on public bonds is not taxed.
• Dividends paid or credited by CIT payers are taxed at 7%, provided they derive from taxable income (under certain circumstances, non-distributed earnings will also be subject to 7% dividend WHT after three years of being generated).
• Income obtained by entities resident, domiciled, or located in LNTJs is taxed at 25%.

Although the Uruguayan tax law follows the source principle as a general rule, technical services (defined as those rendered in the fields of management, technical administration, or advice of any kind) rendered in another country by non-residents but associated with taxable income obtained by the local user in Uruguay are considered to be Uruguayan sourced for tax purposes and subject to WHT. However, when the taxable income obtained by the local user of the service does not exceed 10% of its total income, then only 5% of the service fee paid or credited abroad will be subject to non-resident WHT. Therefore, in these cases, the effective WHT rate is 0.6% (5% x 12%). In those cases where the local taxpayer receiving the service does not obtain any taxable income, the service received will be entirely associated to foreign-source income and thus not subject to WHT.

This WHT should be declared and paid to the Tax Office on the month following the one in which the tax is withheld.

For those countries with which Uruguay has entered DTTs, the maximum WHT rates are the following (in those cases where the maximum WHT provided by the DTT is higher than the internal law WHT, the latter will be applicable):

Notes

1. Source country may tax at a rate not higher than 5%. However, if the beneficial owner is a company resident in the other contracting state and holds at least 75% of the capital of the company distributing dividends, then the WHT will be 0%.
2. Depends on the kind of royalty paid.
3. Source country may tax at a rate not higher than 15%. However, if the beneficial owner is a company resident in the other contracting state and holds at least 25% of the capital of the company distributing dividends, then the WHT will be 5%.
4. Source country may tax at a rate not higher than 15%. However, if the beneficial owner is a company resident in the other contracting state and holds at least 10% of the capital of the company distributing dividends, then the WHT will be 5%.
5. Source country may tax at a rate not higher than 10%. However, if the beneficial owner is an entity, other than an individual, resident in the other contracting state and holds at least 10% of the capital of the company distributing dividends, then the WHT will be 5%.
6. Source country may tax at a rate not higher than 10%. However, if the beneficial owner is a company resident in the other contracting state and holds at least 25% of the capital of the company distributing dividends, then the WHT will be 5%.
7. Source country may tax at a rate not higher than 15%. However, if the beneficial owner is a company resident in the other contracting state and directly holds at least 25% of the capital of the company distributing dividends, then the WHT will be 10%.
8. Source country may tax at a rate not higher than 15%. However, if the beneficial owner is a company resident in the other contracting state and holds at least 20% of the capital of the company distributing dividends, then the WHT will be 5%.
9. Source country may tax at a rate not higher than 10%. However, if the beneficial owner is an entity, other than partnerships, resident in the other contracting state and holds at least 25% of the capital of the company distributing dividends, then the WHT will be 5%.
10. Source country may tax at a rate not higher than 7%. In some special cases mentioned in the DTT, the source country may tax at a rate not higher than 5%.
11. Source country may tax at a rate not higher than 10%. However, if the beneficial owner is an entity, other than partnerships, resident in the other contracting state and holds at least 70% of the capital of the company distributing dividends, then the WHT will be 5%.
12. Source country may tax at a rate not higher than 15%. However, if the beneficial owner is an entity (other than partnerships) resident in the other contracting state and holds at least 10% of the capital of the company distributing dividends, then the WHT will be 5%.
13. Source country may tax at a rate not higher than 15%. However, if the beneficial owner is an entity resident in the other contracting state and holds at least 25% of the capital of the company distributing dividends during the 365 days before the dividend distribution, then the WHT will be 10%.