THE URUGUAYAN EXPERIENCE IN THE IMPLEMENTATION OF THE TP General Tax Directorate of Uruguay Regional Seminar “Multinational taxation & transfer pricing” Port of Spain/ Trinidad andTobago 10-12 June, 2014 Cra. Marcia Grostein – Responsible for the Department of international taxation - large taxpayers Division

Decree No. 337/011 creates the Department of international taxation (DFI) within the Large Taxpayers Division Its purposes are: Analyze the requests for certificates of residence for tax purposes and authorize its issuance Promote the adequate fulfilment of international conventions Assist and support the Department for the control of large taxpayers and the Control Division on international taxation matters Analyze and advise in the field of international information exchange, monitor the effective implementation of the relevant provisions and to collect information when appropriate

Human Resources and DFI Functions Auditors and consultants Profile Monitor the compliance of TP rules, international taxation and the DTCs Provide advise in TP rules, on the correct application of the DTC and on international taxation rules in general, to taxpayers and to the internal request of the Administration Report on requests for Exchange of information received and sent.

An Overview to the DFI The DFI has the following tools : Application procedure and approval of residence tax certificate Procedure for the purposes of applying for an APA Procedure for the exchange of information Transfer Pricing Handbook Handbook on the relation between main office-PE

Subjects and included operations TRANSFER PRICING Subjects and included operations Applicable regulations: Art 1º Dec Nº 56/009 y Art 1º Dec Nº 392/009 Who: Taxable persons of IRAE and personal services outside the dependency ratio achieved by IRAE by choice or mandatory inclusion. By operations With whom? Related entities abroad Entities from countries with no or low taxation regimes Entities located in customs exclaves benefiting from a regime of low or no taxation

TRANSFER PRICING Related Applicable regulations: arts. 39º and 40º T4 TO 1996, art.1 and 2º, Dec. Nº 56/009, art 1º, Dec. Nº 392/009, Number 1) and 2) of Res. DGI Nº 2084/009 and No. 1) of Res. Nº 819/010 According to the above regulations the relation may be: Real: may be by capital, functional influences and others Alleged relation: transactions with countries and regimes of low or no taxation and customs exclaves benefiting from a regime of low or no taxation Operations carried out through intermediaries

FORMALITIES Taxpayers compelled to present the annual information Through the provisions of paragraph 10 of the resolution No. 2084/009 and Nº 745/011, The General Tax Directorate determined who should submit the annual information relating to transfer pricing. These are those taxable persons included in article 1 of the Decree No. 56/009, that verify any of the following conditions:

FORMALITIES Taxpayers compelled to present the annual information Performing transactions included the present regime by an amount greater than approx. 6.000.000 dollars in the corresponding fiscal period Should have been notified by the General Tax Directorate Transactions carried out by the users of the free zone are exempt as long as they are not taxed by the tax on the income from economic activities.

FORMALITIES Mandatory information to be submitted With the purpose of verifying the prices of the operations carried out by the taxpayers identified above, the General Tax Directorate requires the annual submission of: Informative affidavit where the detail and amounts of transactions of the period included in the transfer pricing regime is reported Copy of the accounting statements for the corresponding fiscal exercise, when no other dispositions mandate to present them Study on Transfer Pricing Paragraph 11 of Resolution No. 2084/009 sets out the minimum data that the referred study should include.

FORMALITIES Mandatory information that must be submitted Content of the Transfer Pricing Study: The study on Transfer Pricing shall include - as a minimum - the following aspects:   The detail of the activities and functions performed. The risks involved and the assets used to perform such activities and functions. The details of the components, documentation, circumstances and facts valued for the above-mentioned study.  Detail and amounts of the operations included in the Transfer Pricing regime. Identify the entities with which the transactions were carried out included in the transfer pricing regime. Method used for determining the price of the operations, explaning the reasons that justify why it was the most appropiate to be used, as well as the reasons why others were not used. Identification of each of the selected comparable in order to justify transfer pricing.

FORMALITIES Mandatory information that must be submitted  Identification of information sources on which the comparables were based. Detail of the comparables that were rejected and grounds for their elimination.   Quantification and methodology used to practice the necessary adjustments on the selected comparable entities. Determination of the median and the interquartile range. Description of the business activity, its characteristics, and other relevant elements of the comparable entities. Conclusions of the study.  When the comparative analysis and justification of transfer pricing is performed on base of elements located abroad, they must comply with conditions stated in Article 5º of Decree Nº 56/009 of January 26, 2009.

Information Statement Form. 3001 Data to be reported in the Statement Item 1 – Identification Name of the entity RUT number: This is the number that the D. G. I. grants to the entity at the time of registration. Period. Item 2 – Description: Detail the activies carried out by the company. Item 3 – Information 1) Operations: Select the line number that corresponds to the Operation. It should also detail the operations with related companies even though the amount is zero and it does/or does not need an appropriate adjustment. 2) Amount of operation by related company: enter the total amount in Uruguayan pesos, of the operation indicated in the previous line with the related company, identical operations, same country and method should be grouped

INFORMATION STATEMENT Form 3001 3) Related companies: enter the name or name of the related company. 4) Country invoicing: Select country or the Uruguayan free zone of the invoice’s emission or destination. 5) Country Goods and Services: select the country or the uruguayan free trade zone of origin or destination of the goods or services. 6) Adjustment method: select the adjustment method used. 7) Amount of the adjustment: Enter, if applicable, the full amount of the adjustment according to point 2). Item 4 – Summary Item 5 – Cuestionnaire

Search Samples Total universe SIC Codes Quantitative filters Qualitative filters Orbis 5122 SIC primary Insufficient information Losses in two consecutive years or average I+D/sales above 5% Advertising/sales above 5% Under liquidation Different activities and market More than 50 million Accepted 101 Accepted 23 comparables final Set 5

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