Uruguay: Corporations Control Tax

By Decree 450/002 (“the Decree”) of November 20, 2002, the Executive Branch has put into effect the Corporations Control Tax or “Impuesto de Control de las Sociedades Anónimas” (hereinafter “ICOSA”).

The ICOSA is assessed both at the time of the corporate establishment, and at the time of the end of each fiscal year, on an annual basis.

Current applicable rates are indicated next:

- As of incorporation, the rate is 1.50% calculated over corporations´ minimum face capital at the time of the generation of the tax obligation and must be paid within 30 days counted as from such a moment; and

- As of each fiscal year end, the rate is 0.75% and must be paid in twelve advanced payments (“anticipos”), each of them amounting to 0,0625% of corporations´ minimum face capital.

ICOSA is also assessed in case of corporate transformation, corporate spin-off and/or merger proceedings. Corporations under formation are also required to pay the tax.

As of today, corporations minimum statutory face capital amounts to approximately U$S 24,200, which means that the ICOSA to be paid monthly would amount – assuming current exchange rate – to approximately U$S 15 per month.

Those taxpayers who begin their activities or who had a negative net worth in their last fiscal year or who pay the Net Equity Tax (“Impuesto al Patrimonio”) by way of advanced payments, may opt to pay ICOSA in a single annual payment within the eighth month of their fiscal period. Such single payment amounts to 0,6% calculated over corporations´ minimum face capital.

The obligation to pay by way of advanced payments (“anticipos”) will apply only for tax obligations accrued since January 1, 2003.

ICOSA applies only to “ordinary” SAs (“sociedades anónimas”) doing business in Uruguay or abroad. Offshore companies (so-called “SAFIs” or “sociedades anónimas financieras de inversion”), free zones companies (so-called “SAZF” or “ sociedades anónimas usuarias de zonas francas”) and sport corporations are expressly exempted.

Corporations whose exclusive business purpose is the administration of pension/retirement funds (“Fondos de Ahorro Previsional”) and corporations whose assets are principally dedicated to agricultural exploitation are also exempted.

For those SAs maintaining assets in Uruguay and therefore subject to Net Equity Tax (“Impuesto al Patrimonio”), sums paid for ICOSA shall be creditable to annual Net Equity Tax. In case there exists any excess, no reimbursement will correspond.