useful information

Investment promotion and protection Act - Benefits as from Decree 2/012 – Official Gazette 2/02/2012

05 de enero de 2015

New tax benefits

General changes

There will be Property Tax exemptions for chattels during their entire lifespan and in the case of real estate, exemptions shall take into account 8-year civil works in Montevideo and 10-year civil works in the rest of the country.

Promoted projects shall be exempted from taxes and charges when importing fixed assets and materials intended for civil works and with no previous benefits, as long as they are declared not competitive with the local industry by the DNI (National Industry Department) of the MIEM (Ministry of Industry, Energy and Mining). They shall also have a VAT refund when purchasing materials and hiring services for the civil work in the local market.

As regards the IRAE (Economic Activities Income Tax) minimum exemptions, these will now be 20% while they used to be 51%. With regard to the exemptions periods of time as from now on there will be a difference between new and going concern businesses.

Changes in indicators

The “Increase in local value added” and “Impact of Project on economy” are eliminated because they are hard to measure with objective parameters and therefore, impossible to control.

The employment indicator is the one suffering greater changes because it only assigns now a weight of 30%. The idea is to promote the “quality employment”, scoring the new job positions based on different elements: salary levels, sex and age. On the other hand, every score obtained from the employment indicator shall depend on the investment project size (the bigger the project the greater the employment requirements). There is also an additional incentive for hiring women and individuals younger than 25 and older than 45 years and also for the creation of new job positions in the agricultural sector.  

For Micro and Small enterprises, an additional benefit of 10% of the IRAE and the extension of one more year is included.

For investment projects installed in industrial parks there is an additional 15% benefit in IRAE and a fiscal credit for the employer’s social contribution.

There is a new sectorial indicator associated to the compliance with specific objectives of each ministry, according to the activity in which the investment is made, with a 20% weighting. The definition of this sectorial indicator will depend on each ministry, that is, the Ministry of Economy and Finance established the following indicators: hiring vulnerable persons, developing capital markets, stable working relationships, improvement of services provided and certification of products and processes. The Ministry of Livestock, Agriculture and Fishery chose the following indicators: investments in adapting and/or mitigating climate changes including water management, new forests for shed and shelter, new wire fences, etc.

The i+d+i concept is enlarged and expanded to the concept of “technological diffusion”.

In order to estimate the export indicator for primary products, indirect exports generated for each project shall be taken into account.

In the decentralization indicator there is a weighting change in the province of Montevideo. There is now a difference between rural and urban zones and in the case of the capital, the score shall depend on the project location in the different neighborhoods.