UruguayUruguay

Legal ReferenceArt 38 Title 4 of the Tax Ordinance 1996

The TPG has a soft law status in Uruguay.

Legal ReferenceArt 39 and 40 Title 4 of the Tax Ordinance 1996

Parties are related when: two parties are subject, directly or indirectly, to the management or control of the same individuals or legal entities, or one has the power to direct or define the taxpayer’s activities – due either to participation in capital interest, to credit rights, or to functional or any other type of influence, whether contractual or not. Transactions undertaken by the Corporate Income Tax taxpayers with their foreign subsidiaries, branches, permanent establishments or other related foreign entities are subject to the same condition. Transactions between a permanent establishment and its home office fall within the scope of the transfer pricing rules. The permanent establishment is considered economically independent of its head office. For this purpose, compliance with the same formal and substantial conditions is required for transactions made between parties that are economically and legally independent. Operations undertaken with non-residents that are domiciled, constituted or located in countries with low or nil taxation, or that benefit from a special tax regime of low or nil taxation, as expressly stated in detailed regulations, are treated as being between related parties (without admitting proof to the contrary), and are deemed to be at variance with normal market practice. Transactions with entities operating in customs havens and benefiting from a low or nil-taxation regime, are also included in this presumption. Imports and exports between related parties involving primary farming products or, in general, goods known to be quoted on transparent markets, if a foreign intermediary (that does not fulfil certain requirements established by law) participates in such transactions. This intermediary can be a related party or a third party. In this last case, the rule passes through the intermediary and takes into account the associated status with the second entity which participates in such operation (the foreign client/provider of the intermediary).

Legal ReferenceArt 41, Art 42 and Art 43 Title 4 of the Tax Ordinance 1996

There is a specific method for the import and export of goods that are listed on transparent markets.

• CUP (provided)
• Resale Price (provided)
• Cost Plus (provided)
• TNMM (provided)
• Profit Split (provided)
• Other (provided)

Legal ReferenceArt 41 Title 4 of the Tax Ordinance 1996

• Hierarchy of methods (not selected)
• Most appropriate method (selected)

Legal ReferenceArt 42 Art 43 Title 4 of the Tax Ordinance 1996

For import and export of goods that are listed on transparent markets or similar, Uruguay uses the prices of these markets.

• For controlled transactions involving commodities, the guidance contained in paragraphs 2.18-2.22 of the TPG is followed. (not selected)
• Domestic legislation mandates the use of a specific method for controlled transactions involving commodities (selected)
• Other (not selected)

Legal ReferenceArt 6 Decree No 56/009

There is no express treatment regarding foreign or domestic comparables. From a practical point of view, both are accepted, depending on the facts and circumstances of the case under analysis. However, it is required to take into account the geographical market in order to carry out the comparability.

Legal ReferenceArt 45 Title 4 of the Tax Ordinance 1996

The tax administration may use secret comparables as a means of proof for justifying the prices it has determined. However, there are no practical cases in which the tax administration has made use of such faculty.

Legal ReferenceArt 8 Decree No 56/009

When, due to the application of one of the methods stated in the law, two or more comparable transactions are identified, the median and the interquartile range should be determined for the prices, for the amount of consideration or for the profit margins involved. If the price, the amount of consideration or the profit margin fixed by the taxpayer with the related party falls within the interquartile range, such price, amount or margin is deemed to have been agreed between independent parties. In the event the price, amount of consideration or profit margin agreed is higher/lower than the value of the third/first quartile, the respective median values plus/less 5% are deemed to apply.

Legal ReferenceArt 7 Decree No 56/009

Article 7 of Decree No 56/009 explicitly provides for a number of adjustments that can be applied to eliminate differences between the controlled and comparable uncontrolled transactions.

Uruguayan TP regulations do not establish specific provisions on the topic of transactions with intangibles; neither do they establish guidelines to identify their existence in a given transaction. The general TP rules stated in the law and its regulatory decree apply.

Legal ReferenceArt 19 and Art 20, Title 4 of the Tax Ordinance 1996

Uruguay has a general expense limitation rule, including royalties and other similar expenses.

Uruguayan TP regulations do not establish specific provisions regarding intra group service transactions. The general TP rules stated in the law and its regulatory decree apply.

Legal ReferenceArt 19 and Art 20, Title 4 of the Tax Ordinance 1996; Article 6 of the Tax Code

Uruguay adopts the “substance over form” approach, which requires that the analysis of any particular transaction should adopt a substantial approach based on economic reality. The general expense limitation rule contained in Art 19 and 20 or the T. O. will also apply.

Legal ReferenceArt 19 and Art 20, Title 4 of the Tax Ordinance 1996

Uruguay has a general expense limitation rule, including interest expense.

Legal ReferenceArt 46 and Art 46 TER Title 4 of the Tax Ordinance 1996

• Master file consistent with Annex I to Chapter V of the TPG (selected)
• Local file consistent with Annex II to Chapter V of the TPG (selected)
• Country-by-country report consistent with Annex III to Chapter V of the TPG (selected)
• Specific transfer pricing returns (separate or annexed to the tax return) (selected)

Legal ReferenceResolution of DGI Nº 2084/2009 (numerals 10 to 13).

Taxpayers are required to file annual information if they meet any of the following conditions: - their aggregate transactions subject to TP rules, undertaken during the fiscal year, are in excess of 50 million indexed units (approximately EUR 5.3 million); or - they have been notified for filing such information by the DGI. Taxpayers meeting the above criteria must file the following information: - a sworn declaration stating the details and amounts of the transactions of the period subject to the transfer pricing regime; - a copy of the financial statements for the fiscal period, if not submitted previously in compliance with other regulations; and - a transfer pricing documentation report with a minimum content (local file). The filing deadline for the presentation of this information is 9 months after the closing date of the fiscal year. Taxpayers exempted from the requirement to file the annual information referred to above must maintain the invoices and other supporting evidence justifying the transfer prices used and the comparison criteria applied, during the statute of limitations (5 years, or 10 years in certain cases), in order to be able to duly demonstrate and justify the correct determination of those prices. All information provided to the tax authorities must be in Spanish language. If it is necessary to submit information from abroad, such information must be duly translated into the Spanish language and legalized. CbCR is consistent with BEPS Action 13. CbCR could be submitted in English or Spanish. Uruguayan law provides for a Master file but the Decree necessary to enforce it has not yet been issued.

Legal ReferenceArt 46 Bis, Title 4 of the Tax Ordinance 1996

Penalties for non-filing, late or incomplete filing of TP documentation and CbCR – the penalties are graduated depending on the gravity of the infringement. Fines range from ~ EUR 224 to ~ EUR 224 000.

When the aggregate transactions subject to transfer pricing rules, undertaken during the fiscal year, do not exceed 50 million Indexed Units (~ EUR 5.3 million), taxpayers are exempt from submitting the transfer pricing return. However, these transactions must equally comply with the arm´s length principle.

Legal ReferenceArt 44 Bis Title 4 of the Tax Ordinance 1996; Art. 15 bis of the Decree Nº 56/2009; Uruguay MAP Profile

With regards to the APAs, Uruguay has regulations under the domestic law and an internal procedure. The duration of the APA is three years from the following year that it was signed. With regards to the MAPs, Uruguay does not have internal regulations, but Uruguay includes an article in its double tax treaties that allow MAPs. An internal procedure is in process. This information was provided in Uruguay’s MAP profile.

• Advance Pricing Agreements (APA) (selected)
• Unilateral APAs (selected)
• Bilateral APAs (selected)
• Multilateral APAs (selected)
• Mutual Agreement Procedures (selected)

Legal ReferenceArt. 44 of Title 4 of the Tax Ordinance 1996

The law authorizes the executive power to establish, on a general basis, special notional profit regimes (safe harbours), considering the modus operandi of transactions and the type of business activity or exploitation. Such regimes are optional and serve to determine the Uruguayan-source income from transactions subject to the transfer pricing regulations. Up to now, the executive power has not made use of such faculty.

Despite Uruguay’s internal law recognizing operations between the different parties of the enterprise (such as PE and principal), Uruguay can apply the OECD approach in the context of a DTA only if it has the new version of Article 7.

For the remaining tax treaties.