Uruguay cuts VAT rate on electronic purchases

Consumers are set to enjoy a 2% reduction in the Uruguayan VAT rate applied to purchases of goods and services acquired by bank debit cards, credit cards and wire transfers from 1 August 2014. There will be a further 1% cut in August 2015.

The reduction is only applicable to smaller payments, based on Uruguay’s tax index units of 4,000 units – approximately €389. And the tax payers must come under the Monotributo tax registration regime.

The measure is designed to help reduce the settlement of larger payments by cash and so reduce the opportunities for VAT fraud.

The current standard VAT rate is 22%, with a reduced rate of 10% on basic foodstuffs and public transport services.