How taxes and contributions work in Uruguay

In Uruguay, as a self-employed worker or small business, you pay two institutions: the DGI (taxes) and the BPS (social security — your contributions). Let's go through each in plain words — with the official quote right beside it, so you can verify everything.

DGI: the taxes

VAT (IVA) is the consumption tax: you charge it on sales and deduct the VAT you paid on purchases. The standard rate is 22%.

«El Impuesto al Valor Agregado (IVA) es un impuesto que grava la circulación interna de bienes, la prestación de servicios dentro del territorio nacional, la introducción de bienes al país.»

In English: Value Added Tax (VAT) is a tax on the internal circulation of goods, the provision of services within the national territory, and the introduction of goods into the country.

Very small businesses in the Small Business regime (Literal E) don't file regular VAT: they pay a “IVA Mínimo”, a fixed monthly amount that doesn't depend on how much they bill.

IRAE taxes the profit of your business activity. It's an annual tax, though it's paid through monthly advances.

«El Impuesto a las Rentas de las Actividades Económicas (IRAE) es un impuesto anual que grava las rentas empresariales de fuente uruguaya.»

In English: The Tax on Income from Economic Activities (IRAE) is an annual tax on business income of Uruguayan source.

The general IRAE rate is 25% on net income (revenue minus expenses).

«La tasa del impuesto será del 25% (veinticinco por ciento) sobre la renta neta fiscal.»

In English: The tax rate shall be 25% (twenty-five percent) on net fiscal income.

IRPF taxes your personal income: from work (services) and from capital (for example, rent).

«El Impuesto a las Rentas de las Personas Físicas (IRPF) es un impuesto anual que grava las rentas puras de capital o puras de trabajo de fuente uruguaya.»

In English: The Personal Income Tax (IRPF) is an annual tax on pure capital income or pure labour income of Uruguayan source.

If you pay IRPF on independent work, the law lets you deduct 30% of your income as expenses before calculating the tax.

«Para determinar la renta computable, se deducirá del monto total de los ingresos un 30% (treinta por ciento) en concepto de gastos, más los créditos incobrables, en las condiciones que establezca la reglamentación.»

In English: To determine the taxable income, 30% (thirty percent) of total income is deducted as expenses, plus bad debts, under the conditions set by the regulations.

BPS: the contributions

As a sole trader in Industry & Commerce, you contribute to the BPS at least the Category 1 minimum. The exact amount depends on your family situation.

«Categoría 1.ª: 11 BFC, monto gravado $20.328. Aporte mínimo mensual del titular según su situación: sin cónyuge y sin hijos (SS 15) $8.833; con cónyuge y con hijos (SS 16) $10.394.»

In English: Category 1: 11 BFC, taxable base $20,328. Holder's minimum monthly contribution by situation: no spouse and no children (SS 15) $8,833; with spouse and children (SS 16) $10,394.

If you're just starting out, there's a discount: in the first three years the employer pension contribution is reduced on a sliding scale.

«Las empresas que inician actividad tienen una exoneración del aporte patronal jubilatorio del 75% durante el primer año de actividad, 50% durante el segundo y 25% durante el tercero, abonándose el aporte pleno a partir del cuarto año.»

In English: New businesses get an exemption from the employer pension contribution of 75% in the first year of activity, 50% in the second and 25% in the third, paying the full contribution from the fourth year.

Monotributo is a single, simple contribution to the BPS for very small activities. It's computed on a fixed base of 5 BFC.

«El titular, cónyuge o socio en el régimen de Monotributo, realizan sus aportes jubilatorios y el Fondo de Reconversión Laboral (FRL) sobre la base de un monto predeterminado que equivale a 5 BFC.»

In English: The holder, spouse or partner under the Monotributo regime make their pension and Labour Reconversion Fund (FRL) contributions on a predetermined base equivalent to 5 BFC.

Not everyone can be a monotributista: there's an income cap. The law sets it at 60% of the Literal E limit.

«Los ingresos derivados de la actividad no superen en el ejercicio el 60% (sesenta por ciento) del límite establecido en el literal E) del artículo 52 del Título 4 del Texto Ordenado 1996.»

In English: The income from the activity must not exceed, in the year, 60% (sixty percent) of the limit set in literal E) of article 52 of Title 4 of the 1996 Consolidated Text.

How and when do you pay?

Almost everything is paid month by month. The date? It depends on the last digit of your RUT: the BPS publishes a due-date calendar built on that.

«El vencimiento de las obligaciones mensuales se determina según el último dígito del número de RUT de la empresa.»

In English: The due date of monthly obligations is determined by the last digit of the company's RUT number.

In short: the DGI charges the taxes (VAT, IRAE or IRPF) and the BPS charges your contributions (pension, FONASA, FRL), mostly month by month. Tributo builds this calendar for you and shows, on every amount, the quote and the official link. Even so, always verify on the DGI and BPS sites before paying.