Since January 1st of this year, the agreement signed between the United Kingdom and Uruguay to avoid double taxation of companies from either of these two countries that want to invest in the other -and also to combat tax evasion- began to take effect. The British Embassy in Montevideo held an event yesterday to explain the benefits of this agreement and to expose how trade relations between the island and our country are today.
Just to have an idea, within the prospects of payments made from the United Kingdom, without an agreement, companies have a 20% withholding on royalties. However, with the agreement signed with our country, the rate drops to 10%. In the opposite case, with payments from Uruguay, the royalty withholding is 12% if there is no agreement, but with the agreement with the island, it becomes 10%.
The interest of institutions such as the Uruguayan-British Chamber of Commerce is that, with the help of the new agreement and the attractions of this country, investments continue to come from the United Kingdom. According to data provided by Uruguay XXI, between 2001 and 2016, the net British investment in our country totaled US$423 million.
At the event, the director of the Tax and Legal Advisory Department of KPMG, Luis Aisenberg said that there are several advantages in Uruguay enhanced by the aforementioned treaty that, precisely, can make more British investments arrive. Such is the case of social and political stability, institutional financial strength, favorable tax regime, good business climate, transparency and location of the country.
All these aspects mean that today there are great investment opportunities in specific sectors. The area of software and Information and Communication Technologies (ICT) offers important exemptions when it comes to providing services abroad in terms of VAT and Income Tax on Economic Activities, for example, according to Aisenberg.
In infrastructure there are also good possibilities to invest, especially due to the emergence of mega projects and if it is taken into account that the United Kingdom was one of the first countries to implement public-private partnerships (PPP). According to KPMG's tax expert, this system will be the key to attract British investments of this type.
Renewable energies, logistics, "shared services centers" and agribusiness are other sectors that present favorable climates for attracting investment from the island.
Source: Infonegocios
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