Introduction
On December 8, 2017,Act N° 19566 (the "Act"), which amends the Free Trade Zones General Act,No. 15,921, was enacted. It entered into force on March 8, 2018 (Section 31 of the Act) and, therefore, to date was not subject to regulation by the Executive Branch.
The free trade zones are parts of the Uruguayan territory in which, under certain conditions,its users can perform industrial, commercial and service activities with significant tax exemptions.
One of the main changes to the free trade zones that have been legislated in the aforementioned Act, is the creation of "Thematic Areas of Services" ("TAS").
In this regard,it is set forth that the Executive Branch may authorize the operation of the TAS,for the provision of audiovisual services, recreation and entertainment (excluding services of gambling, betting and complementary activities).
In accordance with the provisions of the new regulations, the TAS are free trade zones whose purpose is the development of activities corresponding to a specific type of services; namely: audiovisual, recreation and entertainment.
Provision of audiovisual services
Within the framework of the new Act, local and foreign companies producing audiovisual content such as soap operas, films, series, etc. have the possibility of setting up in Uruguay for the purpose of producing and exporting audiovisual content and, prior to obtaining the pertinent authorization from the Executive Branch, obtain the fiscal benefits intended to the free trade zones.
The foregoing entails that those companies that are authorized to operate as TAS by the Executive Branch,would be considered as users of the free trade zone and, consequently, with respect to the activities developed in the corresponding TAS, they would be exempt from any Uruguayan taxes, created or to be created, even those in which specific exoneration is required by law (with the exception of special social security contributions).
The Executive Branch shall authorize the operation of the TAS provided that they are located at least 40 km from downtown Montevideo, that is, outside the metropolitan area.
Likewise, the users of the audiovisual TAS will be able to carry out filming activities in the rest of the Uruguayan territory as long as the costs involved in the aforementioned activity do not exceed 25% of the total annual costs of the aforementioned users.
It is a first approach to the subject, so that we remain at your disposal to clarify what is necessary.
Contact:
Héctor Ferrerira - hferreira@hughes.com.uy
Lucien Dzimalkowski - ldzimalkowski@hughes.com.uy
