Tax insight New regulations to the Free Zones Law

Transcription

1 Tax insight New regulations to the Free Zones Law September 2018

2 On September 24 th, the Ex ecutive Power announced the approval of Regulatory Decree of the Free Zones Law (FZL), which had been modified by Law Nbr Its provisions will be effective as from the date of its publication in the Official Gazzette or in two newspaper of national scope. Background At the end of 2017 Law Nbr (in force since March 2018) was approved, introducing to the Uruguayan FZ regime its most significant changes since its creation in The modifications seek to contribute to invigorate the regime (promoting new investments), while at the same time they are part of the path that Uruguay has been following, in pursuit of the commitment assumed to align our country to international standards of tax transparency. The main aspects regulated by the referred Decree are described below. Provision of services Free Zone Users (FZU) will be able to provide within the FZ all kind of services not restricted by the law, and in particular: c)activities of international trading of goods or merchandise located abroad or in transit through national territory. The decree states that FZU must file an Investment Project, within one year counting from its entry into force, in the following cases: Provision of services to non FZ national territory (for those that already provided such services to third countries). Provision of services to third countries (for those that at the moment of the entry into force of the new law did not provide such services). Term of duration of FZU agreements The law stated the following maximum terms for the FZU agreements: Direct users: maximum of 15 years for those who carry out industrial activities, and 10 years for commercial or services activities. Indirect users: maximum of 5 years for all kind of activities. Ex tension of the terms The decree allows longer terms agreements to be authorized in the cases herein described. a) To other FZU settled in other FZ. b) From FZ to third countries. In addition, these services can be rendered to taxpayers taxed by IRAE, who must inform to the FZU such condition. PwC 2

3 FZU located outside of the Metropolitan Area, if any of the following conditions is met within the first three years: More than 50 employees. Investments > UI (approximately 2.5 million US dollars). FZU located within the Metropolitan Area, if any of the following conditions is met within the first three years: More than 100 employees. Inv estments > UI (approximately 5 million US dollars). Revocation The FZ Area can revoke the authorization of the FZU agreement, when the user does not fulfill the requirements and commitments assumed in the investment project. Among others, it will be understood that the non fulfillment is verified when (i) no employment is created in the FZ in an adequate proportion in relation to the activities developed; (ii) the user does not carry out activities in the FZ; or (iii) the user has no tax domicile in the FZ. Regularization FZU who do not provide the required documentation within one year, will have their agreements suspended for 90 days, without being able to perform any activity. Once that period expires without complying with the requirements, the agreement will be revoked. Intellectual property rights (IP) and other intangible assets Income derived from the exploitation of the referred assets will be exempt, provided they come from research and development activities carried out within the FZ. In this context, the Decree foresees that FZU must: Communicate in the investment project that these activities are going to be undertaken. File a statement before the DGI, where the FZU states the fulfillment of the required conditions for the determination of the tax exemption, and that the assets are dully registered according to the IP protection and registration regulations. Identify and maintain the register of expenses and costs incurred in the development of each asset. FZU with agreements in course that do not have an established term, or with automatic extensions, or when their term exceeds the maximum stated by the Law, must comply with the following. The FZU shall provide the authorities (within one year since the decree comes into force), with documentation and information that confirm the economic feasibility of the business plan and its contribution to the objectives of the Law. PwC 3

4 Activities developed outside FZ Ex ceptional activities The users may carry out the following activities in non FZ national territory: a) Collection of defaulting portfolio, if carried out by third parties. It is understood that a credit is defaulting when it has an arrear that exceeds 180 days. The FZ Area will control that the third party that undertakes the service is not related to the user and that it performs the referred activity on a regular basis. b) Goods exhibition in Montevideo, which apply only to FZU settled outside the Metropolitan Area, in locations defined by the FZ developer, after being authorized by the ZF Area. Supplementary activities FZU located outside the Metropolitan Area may carry out the following activities in a sole location provided by the FZ developer: Public relationships. Auxiliary documentation management. Billing. Collection of goods and services of non defaulting portfolio. In addition, the FZU must inform to DGI the beginning of the referred activities and the address of the place used for such purposes. Retail trade The following activities are excluded from the retail trade prohibition: a) Provision of goods and services between FZU, or between FZU and developers. b) Provision of goods and services that are destined to the final consumption of employees working at the FZ. Such activities can only be carried out by FZ developers or by those who are not FZU (after being authorized by the FZ Area). Statement FZU have to file every two years a sworn statement to the FZ Area, which must contain (at least) the following information: level and quality of the human resources employed, investments in fixed assets, income earned and activities performed. Under no circumstances users are allowed to develop activities regarding to the sale of goods and services. FZU with agreements valid and in course at the moment of the entry into force of Law Nbr , must file the referred sworn statement for the first time no later than 31/12/2019. The number of workers employed for tsupplementary activities cannot exceed the employees that work in the FZ. PwC 4

5 Contacts Daniel García Eduardo Rodríguez Eliana Sartori Montevideo Cerrito 461, piso Montevideo, Uruguay T: WTC Free Zone Dr. Luis Bonavita 1294, piso 1, oficina Montevideo, Uruguay T: Zonamerica Business & TechnologyPark Ruta 8, km Edificio M1, oficina D Montevideo, Uruguay T: Punta del Este Av da. Córdoba y Tailandia Maldonado, Uruguay T: +598 PwCUruguay PwC Uruguay El contenido de la presente tiene como propósito brindar información general y no debe utilizarse como sustituto de una consulta con asesores profesionales PricewaterhouseCoopersLtda., PricewaterhouseCoopers, PricewaterhouseCoopersProfessional ServicesLtda. y PricewaterhouseCoopersSoftware Ltda. Todos los derechos reservados. PwC refiere a la firma miembro de Uruguay y en algunas ocasiones a la red PwC. Cada firma miembro es una entidad legal separada. Por favor visite para más detalles.