• Service: Tax, Global Indirect Tax
  • Type: Regulatory update
  • Date: 8/7/2014

 Uruguay - VAT rate reduction; purchases with debit, credit cards 

August 7: An executive decree, issued 22 July 2014, reduces by 2% the rate of value added tax (VAT) on the sale of goods and services that meet certain conditions and are invoiced as of 1 August 2014.

Under the new rules, a reduction of 2% of the basic or minimum rate of VAT applies for the following transactions:

  • Sale of goods and services supplied to end-consumers in certain transaction using debit cards, electronic money instruments or similar payment devices
  • Sale of goods made by consumer cooperatives to their members, subject to certain conditions

In the case of final consumer transactions below 4,000 IU* (approximately U.S. $500) including VAT, a temporary reduction of 4% has been introduced, effective 1 August 2014 when purchases are made by credit card or electronic means (with the rate reduction to be cut to three percentage points from August 2015 and to two points from August 2016). In the case of purchases by final consumers using credit cards, the 2% discount applied from August 2014 will be reduced to 1% as from August 2015 and will expire thereafter.

*IU = indexed units

These changes mean that the new rates for debit card and electronic payment purchases are generally 20% and 8%, and for transactions of less than 4.000 IU, 18% and 6%.

Read an August 2014 report (Spanish) [PDF 225 KB] prepared by the KPMG member firm in Uruguay: Reglamentación de la Reducción del IVA prevista en la Ley de Inclusión Financiera

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