URUGUAY: Legislation paving the way for electronic financial products
On April 4, 2014, the Uruguayan Parliament approved Law No. 19, 210. The new ruling aims to promote electronic means of payment such as debit cards, credit cards, electronic money instruments and electronic funds transfers.
The law sets out a list of items that should gradually start being paid using electronic means. It includes:
• Salaries and any other salary item paid in cash to employees
• Professional fees
• Payment to self-employed workers who provide personal services
• Retirement, pensions
• Social benefits, family allowances, wage supplements, subsidies, temporary compensation and permanent disabilities income
• Provision of food that is not provided in kind
• Sale of goods or services for approx. USD 5,000 (today’s value) and more
• Leases, subleases, and credit use of real property larger than approx. USD 4,600 (today’s value) or its monthly equivalent
• Payment of national taxes, unless the amount is less than USD 1,250 (today’s value)
The law includes regulations on Value Added Tax (VAT), Personal Income Tax and Corporate Income Tax.
Value Added Tax
Regarding this tax, the law recently approved establishes an exemption to interests derived from loans granted by credit entities and reductions on tax rates for certain transactions provided that the payment is made using debit cards, electronic money instruments or similar instruments.
Personal income tax
There will be changes in terms of the computation of tax credit of for-lease properties, as well as lease expense; in this case, leases have to be paid by accreditation in bank accounts.
There also is a new constraint for the computation of the value of acquisition when calculating the taxable result of the sale of immovable property: the value at the moment of acquisition needs to have been paid by electronic means.
Corporate income tax
The law establishes new limitations for deductions of expenses in the settlement of the tax. It now requires certain expenses such as leases, freight services and professional fees to have been paid by electronic means or through accredited bank accounts.
When offering payment services for wages, fees, pensions, social and other benefits, financial intermediation institutions – as well as institutions issuing electronic money – must provide such services to all workers, pensioners and beneficiaries who request them and provide said services as a minimum, with certain basic conditions and, moreover, may not charge any fee for the provision of such services.
Apart from contributing to the improvement of general security in Uruguay by reducing the volume of cash circulating in the market, this law also creates an opportunity for a segment of the population that, until the ruling was approved, had limited or no access to electronic financial products.
ECOVIS Uruguay, Montevideo, Uruguay
ECOVIS AG Steuerberatungsgesellschaft
Ecovis is a leading global consulting firm with its origins in Continental Europe. It has over 4,000 people operating in 50 countries. Its consulting focus and core competencies lie in the areas of tax consultation, accounting, auditing and legal advice.
The particular strength of Ecovis is the combination of personal advice at a local level with the general expertise of an international and interdisciplinary network of professionals. Every Ecovis office can rely on qualified specialists in the back offices as well as on the specific industrial or national know-how of all the Ecovis experts worldwide. This diversified expertise provides clients with effective support, especially in the fields of international transactions and investments - from preparation in the client's home country to support in the target country.
In its consulting work Ecovis concentrates mainly on mid-sized firms. Both nationally and internationally, its one-stop-shop concept ensures all-round support in legal, fiscal, managerial and administrative issues.
The name Ecovis, a combination of the terms economy and vision, expresses both its international character and its focus on the future and growth.