The tax on rural real estate (Impuesto a la Concentración de Inmuebles Rurales—ICIR) was enacted pursuant to Ley N° 18.876, and imposed as a federal tax on rural real estate owned by one taxpayer (either corporation or individual) when the size of the property exceeds a certain hectare threshold.
The Supreme Court based its decision on findings that the tax is unconstitutional under a question of federal taxation versus provincial taxation.
Under Uruguay’s legal system, decisions of a court declaring a law unconstitutional do not have the effect of invalidating the measure for all taxpayers. Rather, each taxpayer must comply with the law until the taxpayer obtains protection of the court. In other words, each taxpayer must assert the law’s unconstitutionality as one of the available legal defenses.
Thus, the high court’s decision is only binding for the taxpayers who initiated this action. The tax is still effective for other taxpayers.
A resolution has been issued suspending the schedule of payments for the ICIR.
Read a February 2013 report (Spanish) [PDF 110 KB] prepared by the KPMG member firm in Uruguay: ICIR: la Suprema Corte lo declaró inconstitucional
Due to the court’s decision, the tax authorities are considering whether to modify or extend existing national taxes, such as the wealth tax (Impuesto al Patrimonio), the tax on property used to fund education (Impuesto a la Enseñanza Primaria), the tax on the transfer of agricultural property (Impuesto de Enajenación de Bienes Agropecuarios), the tax on real estate contribution (Contribución Inmobiliaria Rural), or the corporate income tax (Impuesto a las Actividades Económicas), or to amend the constitution.
Read a March 2013 report (Spanish) [PDF 60 KB] prepared by the KPMG member firm in Uruguay: Ante la declaración de inconstitucionalidad del ICIR. Alternativas que se manejan