INDIVIDUAL TAXATION

Residents are taxed on their Uruguayan-sourced income. Married couples are assessed and taxed separately.

INCOME TAX

Income is classified into two categories: capital income and capital gains, and income from dependent or independent personal services and pension. Calculation of taxable income and applicable income tax rate depends on the classification of income.

Tax on Capital Income and Capital Gains

Capital income realized by individuals is subject to 12% tax. Rental income and capital gains realized from selling Uruguayan property are considered as capital income.

RENTAL INCOME
Rental income is taxed at 12%. When calculating the taxable income, the following are deductible: real estate taxes, property tax for basic education, notary fees of the lease contract, administration costs, housing agency commission, capital losses and bad debts.

CAPITAL GAINS
Capital gains are taxed at 12%. Taxable capital gains are the difference between the sales price and acquisition costs, which is updated by taking into account the Consumer Price Index.

Tax on Labor (Earned) Income)

Income from dependent or independent personal services, such as salaries and wages, and pension are taxed at progressive rates. The tax rates are levied on the contributions and benefits base (bases de prestaciones y contributiones, BPC). For 208, 1 BPC is set to UYU1,775 (US$74).

For income from employment, individuals can deduct certain deductions from the gross income such as social security contributions, medical expenses, and allowances for minor dependents.

For income from independent personal services, a standard deduction of 30% of the gross income is available.

NET WORTH TAX (Impuesto al Patrimonio, IAP)

The net worth tax is imposed at progressive rates. The taxable base is the difference between taxable assets (including properties, assets and rights within the country) and deductible liabilities (debts with banks in Uruguay), and is fixed by assessment by the General Real Estate Registry.

The prescribed tax-free amount (minimo no imponible or MNI) is established annually by the central government and for 2007, it is fixed at UYU1,811,000 (US$75,616) for individuals and estates. For family units or couples filing jointly, the tax-free amount is UYU3,622,000 (US$152,232).

PROPERTY TAX

Property Tax (Contribución Imobiliaria)

Property tax for is levied on immovable properties in Uruguay, payable by the owners. The tax base is the cadastral value of the property as determined by the Cadastral Bureau. The tax rates vary from 0.15% to 0.30%, depending on the property value.