Legal and tax aspects
Legal aspects
In Uruguay, both individuals and legal entities may hold responsibility for agricultural holdings. No limitation shall exist at this respect; both citizens and foreign nationals, minors and adults may own such holdings, regardless of its location. In addition, there are no limitations regarding entity type; people may use General Partnerships, Limited Partnership, Limited Liability Companies. If electing Public Limited Companies, shares need to be nominative.
Taxation
According to the current tax system that applies to the agriculture sector in Uruguay, there are three types of taxes: SEURIDAD social security, municipal taxes and national taxes
SOCIAL SECURITY
Each rural company has to contribute with Social Security, by paying taxes to the BPS (in Spanish: “Banco de Previsión Social”). This contribution is paid in three periods of 4 months.
Employer Contribution
This is calculated by multiplying the following variables:
SUP x IP x SMN x 0.066
IP = tax
SUP = surface
SMN = minimal national wage.
Worker Contribution
Companies in the agriculture and livestock sector are retention agents. This means that when wages need to be paid, the employer must retain the corresponding contributions from the workers, so that he can pay the retained amount together with the Employer Contribution every four months.
In this sector, there is a fictional concept of food and home for the worker, which is added to the established wage. The discounts that apply to the workers verify from 18.125% to 24.125%, depending on the wage.
MUNICIPAL TAXES
RURAL PROPERTY TAX
This is a department tax that affects land properties. It varies according to the property’s land register. It is paid in four or five annual installments, depending on each department.
LIVESTOCK SALE TAX
Selling livestock for meat processing plants, auctions, or private sells, is taxed 1% of the total value. This must be paid 30 days after the transaction is completed.
NATIONAL TAXES
As from July 1st, 2007, the IRA was repealed, and a new tax was created:
IRAE.
IRAE
It charges those agriculture and livestock activities intended to receive primary products, vegetables or animals. Alienation of fixed assets, agriculture and livestock services given by producers themselves, sheparding, share-cropping, and fence activities are also included, whether they are carried out in a permanent, accidental or transitory way.
IRAE is mandatory for public limited companies. Other subjects of law may pay the IMEBA tax, if and when their incomes are no higher than 2,000,000 UI or have up to 1250 ha CONEAT. Expenses could be deduced from duly documented activities.
ALIENATION FO RURAL PROPERTIES
Rent originated from the sale of properties and/or rural establishments have to pay IRAE.
Properties acquired before July 1st, 2007
Companies: Income 6 % x 25 % (IRAE) = 1.5 % o/ sales amount.
Individuals: Income 15 % x 12 % = 1.8 % o/ sales amount.
Properties acquired after July 1st, 2007
Sale price – purchase price (corrected by UI) = Income
Companies: 25 % o/ income.
Individuals: 12 % o/ income.
Forestry: income from forestry exploitation (Law 15939) will not be counted for IRAE or other taxes set in the future.
Rate: Tax rate is of 25% over income tax.
WEALTH TAX
Since 2001, agriculture and livestock companies are exempt from paying wealth tax regarding the land.
As from July 1st, 2007, the wealth tax comes into effect for companies that comply with some of the following conditions:
1- They are resident entities and have the assets represented by bearer securities.
2- The are non-resident entities, except when it comes to individuals.
When shareholder equities are nominative, but the title holder is not an individual, such nominative equities will apply to the bearer.
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11300 Montevideo, Uruguay
info@vieragro.com.uy