"RE: IRPF bands and IRAE exempted activities when providing services for abroad"
Please note:'by working online or some other way. As such they're not paying income tax' 'But income DOES exist in Uruguay if you are working for a Uruguayan company or if your income is generated by a company based in Uruguay...' Just a legal note, If you were to play by the book, this remote work should pay taxes, since it is an activity done physically in Uruguay(Except Free trade zones). If you think is legal, try to produce a bill from a legal entity in Uruguay for those services, and find out if this legal entity is tax exempted. Let's not confuse the fact that the remote work will go unoticed to Tax Authorities, to believe it is tax excempted. Tax authorities probably will not bother chasing those situations for understandable reasons, (Not big fish they are usually after, you pay other taxes by living here, via the IVA, Council, car, utilities etc. you bring foreigh currency etc.) but do not think it is a legal sitation. But hey not worries....live and let live :-), my only aim is to clarify the terms, so people understand, what is really legal, from what it seems possible to do without much practical problems. For personal income - This is for income as employee or a personal services company (Unipersonal) you paid what is call IRPF and the bands are something like what is below: BCP VIGENCIA 01/2009 – Valor BPC $ 1.944 at 01/2009 , this value must have changed, but the percentages should be the same..values are in Uruguayan pesos. 1. Monthly income scale.. Rangos BPC Desde Hasta Tasa Hasta 7 BPC 0 13.608 0% Más de 7 A 10 BPC 13.609 19.440 10% Más de 10 A 15 BPC 19.441 29.160 15% Más de 15 A 50 BPC 29.161 97.200 20% Más de 50 A 100 BPC 97.201 194.400 22% Más de 100 BPC 194.401 25% Non taxable minimum = $13.608.- Apart from this you or your employer will have to pay social security for retirement and also the health insurance. (below 18 will be covered for it as well). If you are self employed you will have to pay it as well, to BPS. (Banco de Prevision Social) The other way to legally work is to own a society and use it to bill. In this case I believe you pay a flat tax which is IRAE and I believe is 25% of the earnings. If it is a SRL with not a lot of turnover (Let say less than USD 200K per year), you do not need to present detailed balances, and the earnings are assumed a 50 per cent of the billing, so 12.5 % of the total turnover is what you will pay as IRAE (Impuesto a la Renta de las Actividades Economicas).-Note IRPF for physical persons, IRAE for companies. At least one partner of the society will have to pay social security but what it needs to pay is not proportional to earnings. You can discount the IVA you pay when buying , which the IVA you charge when selling. If you sell abroad, as in the case of remote work, you do not have to charge IVA. What yes, is legally excempted from paying taxes!! After all there is some true in tax excempted work.... The only excemption of IRAE I know when working for abroad is for the provision of services in: Biotechnology Bioinformatics Development of Logical support.(Software and IT stuff I understand) The latter includes: development, implementation in the client, update and version corrections, GAPs, test and quality control. The related services include, hosting, call centres, outsourcing, sales and other services, as long as they are oriented the logical support, even when the logical support is not developed by the company providing the services. In all cases the services must be for the use outside Uruguay. The laws to check are 18.083 Article number 3. As far as I know, the physical persons are not included in this excemption, so the cheapest legal entity to use for this must be an SRL (Sociedad de Responsabilidad Limitada). So you can avoid paying IRAE, but not IRPF. What is the reason, I do not know, and I think is unfair, but that is the way it is. So the legal way to do this is to create an SRL, you can share the cost with some partners, work is some of the above activites, bill for those services with this company to your clients abroad... Please note I am not an accountant, I just note here the facts to my best understanding. I know people that operates this way. I understand DGI may ask you for e-mails, or some sort of evidence that you are working for abroad on the mentioned fields... I hope this helps.... Martin | 
