Transfer Pricing regulations were introduced in Uruguay in 2007 and continues to be an area of focus for the Uruguayan General Tax Bureau (DGI, as per its Spanish acronym), with audits increasing both in quantity as in sophistication.
Such regulations include Chapter VII of Title 4 of T.O. 1996 (in Law 18.083), Decrees 56/009 and 353/018, and the pronouncements of the DGI on this regard. Local regulations adhere to the arm’s length principle.
- The TP rules apply to Uruguay Corporate Income Tax taxpayers, including local branches of overseas companies and there is a self-assessment regime, i.e. the onus is on the taxpayer to confirm its transfer pricing meets the standard or to adjust its tax return accordingly.
- The regime is a 'one-way street', ie upwards-only adjustments are permitted, and offsets between years and entities is not accepted.
- Only transactions with related parties resident abroad are subject to the regime, with the exception of local customs havens that benefit from a special regime of low or nil taxation. This includes transactions with permanent establishments in Uruguay of foreign-related parties, and with Uruguayan companies permanent establishments abroad.
- Uruguayan TP legislation states a wide definition of the relationship between parties, including the concept of a functional relationship. Moreover, taxpayers undertaking operations with entities structured, domiciled, located, residing or otherwise placed abroad in countries with low or nil taxation or benefiting from a special regime of low or nil taxation will also be subject to TP regulations for those transactions. This includes local and foreign customs havens.
- Taxpayers subject to this regime will be enforced to file annual documentation to the Tax Office if they are explicitly requested or if they have performed operations with related parties for over 50.000.000 Indexed Units (approximately USD 5.500.000 at the current exchange rate). However, even in cases in which subjected taxpayers do not reach the aforementioned amount, they are still enforced to perform a TP analysis and keep all corresponding and probative documentation in case of a fiscal audit.
- For larger multinational groups (over €750m of consolidated income) Uruguay has implemented CbCR (Country by Country Reporting) requirements. Master File obligation is included by Law, but it is not yet regulated and currently not in force.