On 28 June 2016 the UK published the text of the double tax convention with Uruguay signed on 24 February 2016. The agreement is not yet in force. The provisions of the agreement generally follow the OECD Model but the following items are of interest:

Permanent establishment

The definition of a permanent establishment includes a construction, assembly or installation project or supervisory activities in connection with the project if the activity continues for at least 183 days.

The performance of services by an enterprise through its employees or other staff engaged for the purpose constitutes a permanent establishment if services are performed on the same or connected projects in the other contracting state for at least 183 days in any twelve month period.

Withholding tax

The maximum amount of tax that may be withheld in the source state on dividends paid to a company resident in the other contracting state is 5% if the beneficial owner is a company owning at least 10% of the capital of the company paying the dividend; or 15% in all other cases.

The maximum withholding tax on interest is 10%, with some exemptions; and for royalties the maximum tax withheld in the source state is also 10%.

Limitation on benefits

There is also a provision limiting the grant of a benefit under the agreement in respect of an item of income or capital if one of the principal purposes of an arrangement was to obtain that benefit under the agreement.

Mutual agreement procedure

The Article concerning the mutual agreement procedure provides for an arbitration procedure. If the competent authorities are unable to reach agreement on an issue within two years of the presentation of the case to them they must submit the issue to arbitration if the taxpayer so requests. The decision shall be binding on both states unless a person directly affected does not accept the mutual agreement implementing the arbitration decision.

Entry into force

The treaty will come into force when the two countries have ratified the provisions and notified each other of the completion of procedures. For withholding tax the provisions will come into effect from the first day of the second month following entry into force: and for other taxes they will take effect for financial years beginning on or after 1 January following entry into force.