Carrasco, Cartagena 1674
Montevideo, Uruguay 11500
Although the wealth tax (IP) is a tax that is rarely applied worldwide, it still applies in Uruguay. For this reason, and taking into account that on December 31 of each year is when the photo is taken for the payment of said tax for most taxpayers, we believe it is appropriate to refresh some concepts, and, above all, see the possible measures that can be taken in order to position itself in the most efficient way possible against it.
The IP includes all assets located, placed or used economically in the Republic. In principle, assets located outside the country are not taxed
This time, we are going to focus on those industrial and commercial companies, leaving out the rest of the possible taxpayers of this tax that may exist in Uruguay.
For companies, this tax basically levies assets in the country, valued according to tax regulations, less certain liabilities, at the close of the annual fiscal year, at a rate of 1.5%. The vast majority of companies have their annual financial close on 12/31.
Among the main taxable assets we can find:
– Deposits in bank accounts in local banks;
– Real estate;
– Accounts receivable from local companies.
Among the main deductible liabilities we can find:
– The average in the exercise of the balances at the end of the month of debts contracted in the country with certain financial institutions;
– Debts contracted with local suppliers of goods and services as long as said supplier is a taxpayer of this tax;
– Debts for unexpired taxes.
Clarification, when a company has, in addition to the aforementioned encumbered assets, assets abroad and / or exempt assets, to determine the taxable amount, only the amount of debts that exceed the value of said assets can be deducted from the encumbered asset .
Corporations and ICOSA
Public limited companies are also taxed by the Corporation Control Tax (ICOSA), the amount of which is taken into account of IP payments and is set for this year at UYU 18,938.
Advances next year
The companies must also make advances on account of the tax corresponding to 11% of the annual tax. In the case of public limited companies, the monthly amount of ICOSA is subtracted from that 11%.
The settled IP can be offset up to 1% with the IRAE taxed in the same year.
What options do we have to lower the taxable amount of the tax?
The simplest thing is to lower the balance of the deposit that we have in the bank accounts of local banks and for this you can:
– Transfer that money to a company account abroad if you have one;
– Talk to your financial institution to see the possibility of making a short-term investment abroad;
– Buy any of the exempt assets mentioned in title 14 of the IP such as:
o Public, National or Municipal debt securities;
o Securities issued by the Banco Hipotecario del Uruguay (BHU) or the Central Bank of Uruguay (BCU);
o Bonds and treasury bills;
o Shares, social quotas and participations in the capital of companies contributing to the IP.
How can we help you at Insight Trust?
In addition to advice for tax settlement, Insight Trust can assist you in opening a bank account abroad.
For this and other matters you can contact us through the email email@example.com