Resolution No. 51/997 (The “Resolution”) establishes a notional tax calculation system for determining the Uruguayan net income to be levied with Corporate Income Tax (“IRAE” for its Spanish acronym) in trading operations made in Uruguayan territory, namely, trade operations of foreign goods where the origin or the final destination is not Uruguay, and in brokerage transactions when these services are used abroad.
To this end, the Resolution sets forth that the Uruguayan net income is 3% of the variation between the sales price and purchase price of such goods and services. A 25% IRAE rate is applied over this 3% rate, therefore the effective tax rate is 0.75% over the transaction’s net income.
Dividend distribution in Uruguay is subject to a withholding tax of 7%. However, distributed dividends obtained from income not levied with IRAE are exempt from Personal Income Tax (“IRPF” for its Spanish acronym) and Income for Non Residents (“IRNR” for its Spanish acronym).
For activities regulated by this Resolution, a 7% rate applies to the top of the levied income (i.e. the 3% variation between the sales price and the purchase price of goods and services). Namely, dividend distribution will be subject to a 7% withholding rate until the sum of the levied income is reached; once this sum is surpassed, dividends will not be subject to withho.