Uruguay has published Decree No 96/2019 of 22 April 2019 amending exemption incentive for software development with effect from 1 January 2018 to comply with BEPS Action 5. The decree applies retroactively from 1 January 2018.
The Decree clarifies the case of expenses incurred with taxpayers whose income is partially exempted on the basis of the determination of a quotient; the deduction of the expenses is limited to the amount arising from applying to those expenses the percentage corresponding to the non-exempt income, which must be stated in the respective purchase invoice.
The Decree allows the deduction of 60% of costs incurred for software development services and related services, where the income is exempted for the provider under the incentive and provide for the deduction of the amortization of intangible assets acquired from the development of software that has been exempted under the incentive, which must be in accordance with the general rules for the deduction of expenses and proportional deductions.
To amend the documentation requirements to claim the exemption, including that supporting documentation must include a record of the registration number of the corresponding asset and the percentage of exemption determined, otherwise the exemption will not be available.
