Software

Uruguay leads the ICT Development Index in Latin America (ITU, 2017). It ranks first in download speed in Latin America and is the regional leader in fiber-optic internet access. It also boasts highly qualified, multilingual, and competitive talent, the most stable political system in Latin America, and one of the region’s highest security levels.
But it is not only for these reasons that a large number of international companies in the software industry choose the country as their headquarters; it is also because Uruguay has a history of policies that promote the sector and are highly convenient for entrepreneurs of all sizes, both local and foreign.
The last regulation was enacted by Law 19.637 and its regulatory decree 244/018, complemented by Resolution No. 10.043/2018, which established a new paradigm for tax exemption from the Tax on Income from Economic Activities (IRAE), changing the strategy of entrepreneurs in the sector. It is worth noting that these tax changes arose from Uruguay’s commitment to the OECD to implement the necessary legislative changes to eliminate or address preferential tax regimes, in line with the requirements of BEPS Action 5, which seeks to combat tax avoidance practices at the international level.
The following is a simple list of the main aspects to access this exemption:

CONTACT
  • The current nature of the exemption is based on its territorial aspect; the new regulation exempts the production of software that is mainly produced in the country.
  • The regulations differentiate between two types of production:
  • The production of logical supports.
  • The services of logical supports.

Both activities are exempted; the former, proportionally, according to the “quantity” produced in the country, and the latter, totally as long as more than 50 % of its production is carried out in the country.

  • To access the exoneration, certain formal requirements must be met, such as:
  • Submission of a sworn statement to the National Tax Authority (DGI).
  • The corresponding exemption must be recorded in the documentation issued.
  • The exemption may not be applied to sole proprietorships or partnerships.
  • Companies that apply for the exemption will be required to provide electronic receipts.
  • Expenses incurred by exempt companies will not be deductible for the Tax on Income from Economic Activities.

At BAC, we have extensive experience and a specialized division within the firm dedicated to this area. Do not hesitate to contact us.