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Uruguay: Logistics Hub Free Airport and Free Zones (*) www.pwc.com.uy Ref. 370/14 December 2014
Uruguay: Logistics HubFree Airport and Free Zones (*)
www.pwc.com.uy
Ref. 370/14
December 2014
(*) This information has been prepared for TCU Sociedad Anónima for informational purposes only. Proper implementation may require additional technical advice in relation to the specific circumstances of the user and should not be used as a substitute for consultation with professional advisors. PwC assumes no liability to any user of this information. It must not be used for any purposes other than for which it was created and it must be kept confidential.
Uruguay Logistics Hub 3
Contents
1. Uruguay: advantages as a logistics hub 4
2. Operating types 6
3. Permitted activities 8
4. Operational and customs aspects 10
5. Tax benefits: 12 5.1 For entities established in Uruguay 12 5.2 For foreign entities (no presence in Uruguay) 13
6. Labor aspects 14
4 Uruguay Logistics Hub
1. Uruguay: advantages as a logistics hub
Uruguay’s success as a regional logistics hub stems from its strategic geographic location, modern regulatory system and strong economy. With an area of approximately 176,000 km2 and a population of 3.4 million, Uruguay is located on South America’s Atlantic coast, bordering Brazil to the northeast and Argentina to the west. A strategic location in Mercosur and in South America’s southern cone enables Uruguay to be a natural logistics hub that offers an integrated and complementary platform to the regional network with access to a market of over 250 million people. Uruguay has a highly attractive legal and tax framework, including Free Zones, Free Ports, Free Airports and Customs Warehouses aimed at improving corporate supply chains while offering an optimal structure for the establishment of regional distribution centers. The following are some relevant aspects of the Free Airport and Free Zone systems for logistics activities.
6 Uruguay Logistics Hub
2. Operating types
Uruguay Logistics Hub 7
2.2.4
2.2.5
Ref.
2.1 2.2.1
2.2.2
2.2.3
Immediately, no prior authorization is required.
Filing of:
• Annual Corporate Income Tax (IRAE) and Net Wealth Tax (IP) return, together with public accountant report (Limited Review or Audit Report, depending on the category of the company - CEDE or No CEDE - as determined by the Uruguayan tax authority).
• Value Added Tax (IVA) return (monthly or annually depending on the category of the company - CEDE or No CEDE - as per the Uruguayan tax authority).
Free Airport (FA)
No. Both residents and non-residents may operate. No restrictions on corporate type.
No
No
Timeframe to start operations
What minimum formal obligations do local entities have with the Uruguayan tax authority?
Operating types
Is it necessary to have a local entity to operate? What type of local entities are permitted (SRL, SA)?
Is there any particular corporate type that provides advantages for operations?
Are there additional formal requirements to establish a local entity and to start operations?
45 to 60 days once the application has been filed.
Filing of:
• Informative annual return of financial statements together with public accountant report (Limited Review or Audit Report depending on the level of assets and income of the company).
• Informative annual return of purchases and sales of goods and services.
Free Zone (FZ)
No. Both residents and non-residents may operate. No restrictions on corporate type.
Sociedad Anónima with sole corporate purpose as FZ user: simplified procedure for amendments to bylaws and capital expansion and/ or reduction due to not being subject to Internal Audit Office (AIN) control.
• FZ user contract signed with FZ operator or another existing user.
• Preparation of a business plan containing information about the company or the project to be carried out (minimum requirements: create direct or indirect employment in the FZ and carry out the activity in facilities provided by the FZ operator or the user).
• Free Zone Area authorization request (Ministry of Economy and Finance), by filing the contract and business plan.
2.2 If establishing an entity in Uruguay:
8 Uruguay Logistics Hub
3. Permitted activities
Permitted activities
Ref. Free Airport (FA) Free Zone (FZ)
a) Those that add value to goods without changing its origin, modifying its appearance or facilitating availability or destination of the goods. In addition, as of 17 March 2015 (when the Uruguayan Customs Code will go into effect), goods may be modified in terms of status or nature, without modifying origin. These modifications include: assembly; mixtures; installation or replacement of parts and accessories; hardware configuration; software installation; production of packing, packaging, labeling and other products to the extent they are used for trading merchandise that will depart the FA; and other similar operations as deemed by the Executive Branch. b) Services related to goods. In addition to conventional loading, unloading, stevedoring and merchandise movement activities, also included are transport, transshipment, reshipment, transit, removal, arrangement, deposit, storage, repackaging, relabeling, classifying, grouping, ungrouping, consolidating, deconsolidating, handling and fractioning.
What activities are permitted?
3.1 Commercial, industrial and service activities of any type.
Uruguay Logistics Hub 9
10 Uruguay Logistics Hub
4. Operational and customs aspects
Ref.
4.1
4.2
4.3
Free Airport (FA)
No
No
• They maintain Mercosur origin.
• Extension of origin certificate validity for the term in which they are stored.
• Possibility of dividing the merchandise while maintaining origin (derived certificates).
Transit / Storage of goods
Is there a time limit for holding / storage of goods?
Are there any particular requirements for transit / storage of goods coming from abroad?
What happens with Mercosur origin goods that physically go through Uruguay and have Mercosur as the final destination?
Free Zone (FZ)
No
Goods must enter the FZ upon arrival to the country, and are able to stay in other customs facilities (e.g. ports) for up to 60 consecutive days.
• They lose Mercosur origin.
• Goods with Mercosur destination from FZs must pay the Mercosur Common External Tariff (0 to 35% depending on the item).
Uruguay Logistics Hub 11
Ref.
4.4 4.5.1
4.5.2
4.5.3
4.5.4
Free Airport (FA)Transit / Storage of goods
How are operations classified from a customs and tax perspective? What customs procedures are required upon entry?
What customs procedures are required upon departure?
Is there a minimum period of time between entry and departure of goods?
It is possible to perform multimodal operations?
Free Zone (FZ)
Abroad FASimplified
entry
Abroad
Transit
Transit
Export
Transit
Transit
Import
FZ
FA
FA / FZ
FZ
AbroadTransshipment / reshipment
Abroad
FA / FZ
Abroad
FA / FZNational Custom
Territory
National Custom
Territory
By air
From To
=
=
=
=
=
=
=
=
By air
By air
Other means of transport
Other means of transport
None
Departure by air: Simplified Message. No customs broker is required and package/weight must be declared. Departure by other means: Transit DUA / Import DUA. Customs broker required. Value, customs classification, weight, packages, supplier, addressee and origin must be declared, among others.
No
Yes
Transit Single Customs Document (DUA). Customs broker required. Value, customs classification, weight, packages, supplier, addressee and origin must be declared, among others.
Transit DUA / Import DUA. Customs broker required. Value, customs classification, weight, packages, supplier, addressee and origin must be declared, among others.
Yes (24 hours).
Yes
4.5 If goods enter by air:
Uruguay Logistics Hub 11
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5. Tax benefits
Ref. 5.1.1
5.1.2
5.1.3
Free Airport (FA)
• Exempt, if goods for sale, in transit or stored in FA are from foreign origin and do not originate from nor have the national customs territory as a destination.
• Exemption also applies to income derived from goods sold, in transit or stored in FA, that have the national customs territory as the destination, provided these operations do not exceed 5% of total sales in the fiscal year. If exceeded, the exemption only applies to transactions of goods that do not have national customs territory as the destination.
• Activity must be carried out entirely from the FA or abroad, and the exemption applies only to the sale of goods (in transit or stored in FA).
Assets in Uruguay at the end of the fiscal year levied at 1.5%.
Not applicable
Free Zone (FZ)
Exempt
Exempt
Not applicable
Tax benefits IRAE (corporate income tax)
IP (net wealth tax)
IVA (VAT) and taxes on entry of foreign goods
5.1 For entities established in Uruguay:
12 Uruguay Logistics Hub
Uruguay Logistics Hub 13
Ref. 5.1.4
Tax benefits Withholding tax agent on income paid (or credited) abroad – Non Residents Income Tax (IRNR)
Free Airport (FA)
• Dividends: 0% if paid out of income not subject to IRAE. 7% if dividends arise from income subject to IRAE.
• Interest from loans: 0% if assets of the local entity earning income not subject to IRAE >90% of total assets. Other cases: 12%.
• Technical services: 0% if the local entity does not obtain income subject to IRAE. 0.6% if income subject to IRAE does not exceed 10% of total income. Other cases: 12%.
• Royalties: 0% if earned in rights used outside Uruguay. Other cases: 12%.
Free Zone (FZ)
• Dividends: exempt.
• Interest on loans: exempt.
• Technical services: exempt.
• Royalties: exempt.
5.2.1
5.2.2
5.2.3
• Exempt, if goods for sale, in transit or stored in FA are from foreign origin and do not originate from nor have the national customs territory as a destination.
• Exemption also applies to income derived from goods sold, in transit or stored in FA, that have the national customs territory as the destination, provided these operations do not exceed 5% of total sales in the fiscal year.
• Activity must be carried out entirely from the FA or abroad, and the exemption applies only to the sale of goods (in transit or stored in FA).
Exempt
Not applicable
IRNR
IP
IVA and taxes on entry of foreign goods
• Exempt, if goods for sale, in transit or stored in FZ are from foreign origin and do not originate from nor have the national customs territory as a destination.
• Exemption also applies to income derived from goods sold, in transit or stored in FZ, that have the national customs territory as the destination, provided these operations do not exceed 5% of total sales in the fiscal year.
• Activity must be carried out entirely from the FZ or abroad, and the exemption applies only to the sale of goods (in transit or stored in FZ).
Exempt
Not applicable
5.1 For entities established in Uruguay:
5.2 For foreign entities (no presence in Uruguay):
14 Uruguay Logistics Hub
6. Labor aspects
Ref.
6.1
6.2
6.3
Free Airport (FA)
No
CESS for employers: 12.625%. CESS for employees: 18.125% to 23.125% (depending on salary, marital status, spouse and dependent minor children). IRPF for employees: 0 to 30%, with a tax exempt minimum and limited deductions.
No
Labor aspects
Are there any special requirements regarding employees?
Social security contributions (CESS) and personal income tax (IRPF) for Uruguayan employees
Are there tax benefits for foreign employees?
Free Zone (FZ)
FZ user must hire a minimum of 75% of natural or legal Uruguayan citizens, (3 Uruguayan citizens per foreign employee).
CESS for employers: 12.625%. CESS for employees: 18.125% to 23.125% (depending on salary, marital status, spouse and dependent minor children). IRPF for employees: 0 to 30%, with a tax exempt minimum and limited deductions.
Yes Foreign employees may opt out of the Uruguayan social security system and, with regard to personal income tax, opt to be subject to IRNR (at 12%) instead of IRPF (progressive rates up to 30%).
MontevideoCerrito 461, 1st floor11.000 Montevideo, UruguayT: +598 29160463F: +598 29160605
WTC Free ZoneDr. Luis Bonavita 1294, 1st floor, office 10611.300 Montevideo, UruguayT: +598 26262306
Zonamerica Business & Technology ParkRuta 8, km 17.500Building M1, offices H/I/J 91.600 Montevideo, Uruguay T: +598 25182828F: +598 25182829
Punta del EsteAvda. Córdoba y Tailandia20.000 Maldonado, UruguayT: +598 42248804F: +598 42248804 Int. 3000
www.pwc.com.uy
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