Volume 62, Number 11 June 13, 2011

(C) Tax Analysts 2011. All rights reserved. Tax Analysts does not claim copyright in any public domain or third party content.
Tax Incentives Extended for
High-Tech Manufacturers

by Guzmn Ramrez

Reprinted from Tax Notes Intl, June 13, 2011, p. 873

 Reprinted from Tax Notes Intl, June 13, 2011, p. 873
Tax Incentives Extended for
High-Tech Manufacturers
The Uruguayan government has announced that a
tax incentive program for manufacturers of high-tech
products will be expanded to foster development of
industries such as data processing, energy generation,
telecommunications, and pharmaceuticals.
To date, high-tech products account for only 1.7 per-
cent of Uruguays exports, with commodities account-
ing for the highest percentage (more than 56 percent).
The government has sought to remedy the situation
with an investment promotion regime that allows local
and foreign companies to apply for important tax ex-
emptions, regardless of their branch of activity.
Eligible companies will obtain material tax benefits
that include exemptions from the business income tax
(IRAE), net worth tax (IPAT), and import taxes, as
well as the possibility of applying a tax credit for the
VAT on purchases of goods and services.
TAX NOTES INTERNATIONAL
COUNTRY
(C) Tax Analysts 2011. All rights reserved. Tax Analysts does not claim copyright in any public domain or third party content.
DIGEST
Over the past three years, the regime has been very
successful. Between 2008 and 2010, it attracted invest-
ments in excess of $3.2 billion, which on average repre-
sented 29 percent of Uruguays total annual private
investment. If the 46 percent growth rate recorded be-
tween January and April of this year continues, invest-
ment is expected to increase to approximately $1.7 bil-
lion a year.
Once an investment project is approved by the gov-
ernment, the company must make certain commit-
ments, such as job creation, increased exports, the use
of clean energy, or the development of research and
innovation techniques.
In deciding on the scope of benefits to be granted to
investment projects in the industrial sector, the govern-
ment will also consider the technological level of the
products manufactured, ranking them from zero for
raw materials to 10 for high-tech content.
Guzmn Ramrez, associate, Tax Department,
Ferrere Attorneys at Law, Montevideo
JUNE 13, 2011 1