Castellán

The investment promotion regime for construction ("RPIC", regulated by Decree No. 138/2020), is part of the general investment promotion regime, which declares the promotion and protection of investments made by national and foreign investors in the national territory to be of national interest (Law No. 16.906).

Activities promoted by the RPIC.

i. the sale or lease of real estate for offices or housing, and

ii. private urbanizations, in large-scale economic projects. These include private initiatives aimed at urbanizing land that was previously rural or suburban, providing the necessary infrastructure and appropriate subdivision to build housing and complementary uses. The initiative could end with the subdivision stage, or extend (totally or partially) to the construction of housing on the subdivided land.

It is important to note that all projects must meet certain requirements, including a specific value in civil works and movable property intended for common areas, in order to enjoy the benefits of the RPIC.

What are the benefits?

i. Exemptions in the Tax on Economic Activities Income (IRAE): in varying percentages, depending on the amount of the investment and the score obtained in six indicators (employment, exports, decentralization, cleaner technologies, incorporation of R&D - Research and Development, and sectoral indicators).

ii. Exemptions in the Wealth Tax.

iii. Exemptions from fees or taxes (including VAT) on imports of equipment, machinery, and materials for civil works and movable property intended for common use areas, provided they have been declared non-competitive with the national industry.

iv. VAT refund (through credit certificates issued under the regime applicable to exporters) for having acquired equipment, machinery, materials, and services for civil works in Uruguay, as well as movable property intended for common use areas.

What modifications are in effect since January 1, 2024?

1) Quantitative limits defining which projects will be considered large-scale economic projects were adjusted.

From now on, those will be considered such that meet the following criteria:

1. Constructions with a value in civil works and movable property intended for common areas equal to or greater than 30 million Indexed Units (currently approximately USD 4.5 million) which, in turn, must be registered with the Social Security Bank.

2. Projects already registered with the Social Security Bank before January 1, 2024, must have pending investments in civil works and movable property intended for common areas worth equal to or greater than 30 million Indexed Units (UI).

In all cases, the Investment Law Application Commission (COMAP) will determine the percentage of the area intended for common use that the investment project must have.

2) The deadline to apply for RPIC has been extended: investments that meet the aforementioned requirements must now be submitted before January 1, 2025.

3) The deadline for the execution of projects that have not been able to start works or that estimate an extension beyond the previously established deadline has also been extended. It is established that the execution cannot exceed September 30, 2027 in any case.

4) Finally, modifications were introduced regarding the IRAE exemption scales, varying according to the magnitude of the project. These scales are now structured as follows:

Montevideo, January 22, 2024.