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Logistics Hub Free Airport and Free Zones (*) (*) This Information Has Been Prepared for TCU Sociedad Anónima for Informational Purposes Only

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Logistics Hub Free Airport and Free Zones (*) (*) This Information Has Been Prepared for TCU Sociedad Anónima for Informational Purposes Only www.pwc.com.uy Ref. 370/14 December 2014 Uruguay: Logistics Hub Free Airport and Free Zones (*) (*) This information has been prepared for TCU Sociedad Anónima for informational purposes only. Proper implementation may require additional technical advice in relation to the specific circumstances of the user and should not be used as a substitute for consultation with professional advisors. PwC assumes no liability to any user of this information. It must not be used for any purposes other than for which it was created and it must be kept confidential. Contents 1. Uruguay: advantages as a logistics hub 4 2. Operating types 6 3. Permitted activities 8 4. Operational and customs aspects 10 5. Tax benefits: 12 5.1 For entities established in Uruguay 12 5.2 For foreign entities (no presence in Uruguay) 13 6. Labor aspects 14 Uruguay Logistics Hub 3 1. Uruguay: advantages as a logistics hub Uruguay’s success as a regional logistics hub stems from its strategic geographic location, modern regulatory system and strong economy. With an area of approximately 176,000 km2 and a population of 3.4 million, Uruguay is located on South America’s Atlantic coast, bordering Brazil to the northeast and Argentina to the west. A strategic location in Mercosur and in South America’s southern cone enables Uruguay to be a natural logistics hub that offers an integrated and complementary platform to the regional network with access to a market of over 250 million people. Uruguay has a highly attractive legal and tax framework, including Free Zones, Free Ports, Free Airports and Customs Warehouses aimed at improving corporate supply chains while offering an optimal structure for the establishment of regional distribution centers. The following are some relevant aspects of the Free Airport and Free Zone systems for logistics activities. 4 Uruguay Logistics Hub 2. Operating types 6 Uruguay Logistics Hub Ref. Operating types Free Airport (FA) Free Zone (FZ) 2.1 Is it necessary to have a local No. No. entity to operate? Both residents and non-residents may Both residents and non-residents may operate. operate. 2.2 If establishing an entity in Uruguay: 2.2.1 What type of local entities are No restrictions on corporate type. No restrictions on corporate type. permitted (SRL, SA)? 2.2.2 Is there any particular No Sociedad Anónima with sole corporate corporate type that provides purpose as FZ user: simplified procedure for advantages for operations? amendments to bylaws and capital expansion and/ or reduction due to not being subject to Internal Audit Office (AIN) control. 2.2.3 Are there additional formal No • FZ user contract signed with FZ requirements to establish a operator or another existing user. local entity and to start operations? • Preparation of a business plan containing information about the company or the project to be carried out (minimum requirements: create direct or indirect employment in the FZ and carry out the activity in facilities provided by the FZ operator or the user). • Free Zone Area authorization request (Ministry of Economy and Finance), by filing the contract and business plan. 2.2.4 Timeframe to start Immediately, no prior authorization is 45 to 60 days once the application has operations required. been filed. 2.2.5 What minimum formal Filing of: Filing of: obligations do local entities have with the Uruguayan tax • Annual Corporate Income Tax (IRAE) • Informative annual return of financial authority? and Net Wealth Tax (IP) return, together statements together with public with public accountant report (Limited accountant report (Limited Review or Review or Audit Report, depending on the Audit Report depending on the level of category of the company - CEDE or No assets and income of the company). CEDE - as determined by the Uruguayan tax authority). • Value Added Tax (IVA) return (monthly • Informative annual return of purchases or annually depending on the category of and sales of goods and services. the company - CEDE or No CEDE - as per the Uruguayan tax authority). Uruguay Logistics Hub 7 3. Permitted activities Ref. Permitted Free Airport (FA) Free Zone (FZ) activities 3.1 What activities are a) Those that add value to goods without changing Commercial, industrial permitted? its origin, modifying its appearance or facilitating and service activities of any availability or destination of the goods. In addition, type. as of 17 March 2015 (when the Uruguayan Customs Code will go into effect), goods may be modified in terms of status or nature, without modifying origin. These modifications include: assembly; mixtures; installation or replacement of parts and accessories; hardware configuration; software installation; production of packing, packaging, labeling and other products to the extent they are used for trading merchandise that will depart the FA; and other similar operations as deemed by the Executive Branch. b) Services related to goods. In addition to conventional loading, unloading, stevedoring and merchandise movement activities, also included are transport, transshipment, reshipment, transit, removal, arrangement, deposit, storage, repackaging, relabeling, classifying, grouping, ungrouping, consolidating, deconsolidating, handling and fractioning. 8 Uruguay Logistics Hub Uruguay Logistics Hub 9 4. Operational and customs aspects Ref. Transit / Storage of goods Free Airport (FA) Free Zone (FZ) 4.1 Is there a time limit for No No holding / storage of goods? 4.2 Are there any particular No Goods must enter the FZ upon requirements for transit / arrival to the country, and are storage of goods coming from able to stay in other customs abroad? facilities (e.g. ports) for up to 60 consecutive days. 4.3 What happens with Mercosur • They maintain Mercosur • They lose Mercosur origin. origin goods that physically origin. go through Uruguay and have Mercosur as the final • Extension of origin certificate • Goods with Mercosur destination? validity for the term in which destination from FZs must they are stored. pay the Mercosur Common External Tariff (0 to 35% depending on the item). • Possibility of dividing the merchandise while maintaining origin (derived certificates). 10 Uruguay Logistics Hub Ref. Transit / Storage of goods Free Airport (FA) Free Zone (FZ) 4.4 How are operations classified from a customs and tax From To perspective? By air Simplified Abroad FA = entry By air = FZ Transit Other means of Abroad FA / FZ = Transit transport By air Transshipment FA Abroad = / reshipment Other means of Abroad = Transit transport FZ Abroad = Transit National Custom FA / FZ = Export Territory National FA / FZ Custom = Import Territory 4.5 If goods enter by air: 4.5.1 What customs procedures are None Transit Single Customs Document required upon entry? (DUA). Customs broker required. Value, customs classification, weight, packages, supplier, addressee and origin must be declared, among others. 4.5.2 What customs procedures are Departure by air: Transit DUA / Import DUA. required upon departure? Simplified Message. Customs broker required. Value, customs No customs broker is required and package/ classification, weight, packages, supplier, weight must be declared. addressee and origin must be declared, among others. Departure by other means: Transit DUA / Import DUA. Customs broker required. Value, customs classification, weight, packages, supplier, addressee and origin must be declared, among others. 4.5.3 Is there a minimum period of No Yes (24 hours). time between entry and departure of goods? 4.5.4 It is possible to perform Yes Yes multimodal operations? Uruguay Logistics Hub 11 5. Tax benefits Ref. Tax benefits Free Airport (FA) Free Zone (FZ) 5.1 For entities established in Uruguay: 5.1.1 IRAE • Exempt, if goods for sale, in transit or Exempt (corporate income tax) stored in FA are from foreign origin and do not originate from nor have the national customs territory as a destination. • Exemption also applies to income derived from goods sold, in transit or stored in FA, that have the national customs territory as the destination, provided these operations do not exceed 5% of total sales in the fiscal year. If exceeded, the exemption only applies to transactions of goods that do not have national customs territory as the destination. • Activity must be carried out entirely from the FA or abroad, and the exemption applies only to the sale of goods (in transit or stored in FA). 5.1.2 IP Assets in Uruguay at the end of the fiscal Exempt (net wealth tax) year levied at 1.5%. 5.1.3 IVA (VAT) and taxes on entry Not applicable Not applicable of foreign goods 12 Uruguay Logistics Hub Ref. Tax benefits Free Airport (FA) Free Zone (FZ) 5.1 For entities established in Uruguay: 5.1.4 Withholding tax agent on • Dividends: 0% if paid out of income not • Dividends: exempt. income paid (or credited) subject to IRAE. 7% if dividends arise abroad – Non Residents from income subject to IRAE. Income Tax (IRNR) • Interest from loans: 0% if assets of the • Interest on loans: exempt. local entity earning income not subject to IRAE >90% of total assets. Other cases: 12%. • Technical services: 0% if the local entity • Technical services: exempt. does not obtain income subject to IRAE. 0.6% if income subject to IRAE does not exceed 10% of total income. Other cases: 12%. • Royalties: 0% if earned in rights used • Royalties: exempt. outside Uruguay. Other cases: 12%. 5.2 For foreign entities (no presence in Uruguay): 5.2.1 IRNR • Exempt, if goods for sale, in transit or • Exempt, if goods for sale, in transit or stored in FA are from foreign origin and stored in FZ are from foreign origin and do not originate from nor have the do not originate from nor have the national customs territory as a national customs territory as a destination. destination. • Exemption also applies to income • Exemption also applies to income derived from goods sold, in transit or derived from goods sold, in transit or stored in FA, that have the national stored in FZ, that have the national customs territory as the destination, customs territory as the destination, provided these operations do not exceed provided these operations do not exceed 5% of total sales in the fiscal year.
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