Transfer Pricing Regulations in Uruguay
Since July 1, 2007, Uruguay has been subject to the transfer pricing regime established by Law No. 18,803, as implemented by Decrees No. 56/009 and No. 392/009, as amended. These regulations establish the obligation for taxpayers who conduct transactions with related entities that are incorporated, domiciled, established, resident, or located abroad, and that conduct transactions with entities located in countries with low or no taxation or that benefit from a special regime of low or no taxation, including customs enclaves located within national territory.
The General Tax Directorate issued Resolution No. 2,084/009 (as amended by Resolutions No. 819/010 and No. 2,098/009), which defined the concepts and requirements established for the transfer pricing report:
- Chapter VII, Title 4 of the Corporate Income Tax Law, pursuant to Law No. 18,083.
- Presidential Decree No. 56/009
- Presidential Decree No. 392/009
- DGI Resolution No. 2,084/009
- DGI Resolution No. 2,269/009
- DGI Resolution No. 818/010
- DGI Resolution No. 745/011
- Presidential Decree No. 353/018
- DGI Resolution No. 2,084/009
- DGI Resolution No. 094/2019
Relationship Rules in Uruguay
Pursuant to Article 39 of Title 4 of the 1996 Consolidated Text, a related-party relationship exists when a taxpayer conducts transactions with nonresident entities or entities operating in customs enclaves and, consequently, enjoy zero or low taxation, and both parties are subject to the direction or control of the same individuals or legal entities, or lack the decision-making power to direct their own activities, whether due to their equity interest, the level of their credit rights, or other factors.
Likewise, Article 40 of the same Title (replaced by Law No. 19,484 of January 5, 2017) states that parties shall be presumed to be related transactions agreed upon between the taxpayer and entities that are resident, domiciled, incorporated, or located in countries or jurisdictions with low or no taxation, or that benefit from a special low- or no-taxation regime.
Formal Obligations: Informative Affidavits
Taxpayers required to file a Transfer Pricing Study must do so annually using Form 3001; this return must contain a detailed breakdown and quantification of the transactions covered by the current regulations.
Taxpayers subject to transfer pricing legislation who are required to prepare and retain supporting transfer pricing documentation are those who:
- Conduct transactions with related parties incorporated, domiciled, established, resident, or located abroad, and that fall under Article 3 of Title 4 of the 1996 Consolidated Text.
- Earn income from personal services outside an employer-employee relationship subject to the Tax on Income from Economic Activities, by conducting transactions with related parties.
- Conduct transactions with entities incorporated, domiciled, established, resident, or located in countries with low or no taxation or that benefit from a special low- or no-taxation regime, including customs enclaves located within national territory.
Furthermore, regarding Country-by-Country (CbC) reports and the Master File, a decree was published on October 30, 2018, regulating Chapter IV of Law 19,484 (Tax Transparency Act), concerning these new transfer pricing requirements.
The decree applies to multinational groups whose total consolidated revenue at the end of the fiscal year is equal to or greater than 750 million euros or the equivalent converted at the exchange rate in effect at the end of the fiscal year in question.
Deadline for Filing Annual Tax Returns.
Taxpayers subject to the Transfer Pricing regime must file the transfer pricing return with the DGI by the ninth month following the end of the corresponding fiscal year, based on the last digit of their RUT number.
Supporting documentation for transfer pricing must be submitted by taxpayers and responsible parties required to report annually, who will have a period of no less than 8 (eight) months, counted from the end of the fiscal year in question.
Penalties for Noncompliance
Article 68 of Law No. 8083 states that anyone who fails to comply with the obligations set forth in the first paragraph of that article shall be subject to a fine of up to one thousand times the maximum amount of the fine for a violation (Article 95 of the Tax Code), depending on the severity of the noncompliance. The maximum fine set forth in Decree 465/011, which updates the amounts established in Articles 95 and 98 of the aforementioned Code, is 4,750 Uruguayan pesos; therefore, this penalty may amount to as much as 4,750,000 Uruguayan pesos.
If the DGI requests a transfer pricing study and the taxpayer fails to submit it, the DGI may suspend the certificate confirming that the taxpayer has complied with their tax obligations. The immediate consequence is a prohibition on importing goods or obtaining bank loans.
Additionally, the Tax Authority has the power to adjust the prices agreed upon by the taxpayer through transfer pricing audits in Uruguay, and if those prices are found not to comply with the arm’s-length principle based on the results of the intercompany pricing audit.
