On 24 April 2018, the Uruguayan Executive Power issued Decree No. 103/018, declaring that Panama may be removed from the list of countries, jurisdictions and regimes with low or no taxation (LONT) for income tax purposes. The Decree also sets the stage for removing Panama from the list of LONT countries for transfer pricing purposes if Panama complies with certain requirements.

Background

In 2009, Uruguay's tax authorities (DGI) issued Decree No. 56/009, including Panama in its list of LONT countries for transfer pricing purposes. On 14 March 2017, the DGI issued Resolution No. 1,315/017, including Panama in the list of LONT countries for income tax purposes.

In response to Uruguay's inclusion of Panama on its lists of LONT countries, Panama's Ministry of Foreign Affairs, Ministry of Economy and Finances, and Ministry of Commerce and Industry issued Resolution No. 001-2018 (8 March 2018), including Uruguay on a retaliatory list of countries that had taken discriminatory measures against Panama.

Decree No. 103/018

In order to be removed from the lists of LONT countries, Panama must notify the OECD's Multilateral Competent Authority Agreement's Coordinating Body Secretariat that it has identified Uruguay as an associate country for the automatic exchange of financial information. Panama must complete the identification and notification requirements before 15 May 2018. The first year for which information must be exchanged is 2017. Additionally, the Decree requires Panama to remove Uruguay from the list of countries that have taken discriminatory measures against Panama.

The effective date for Panama's removal from the lists of LONT countries will be the date on which Panama notifies the Uruguayan Ministry of Foreign Affairs of Panama's compliance with these requirements.

The DGI will be required to follow up on the compliance with these requirements, as well as publicize the date on which Panama was removed from the lists of LONT countries.

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CONTACTS

For additional information with respect to this Alert, please contact the following:

Ernst & Young Uruguay, Montevideo

• Martha Roca
  martha.roca@uy.ey.com
• Rodrigo Barrios
  rodrigo.barrios@uy.ey.com

Ernst & Young, LLP, Latin America Business Center, New York

• Ana Mingramm
  ana.mingramm@ey.com
• Enrique Perez Grovas
  enrique.perezgrovas@ey.com
• Pablo Wejcman
  pablo.wejcman@ey.com

Ernst & Young LLP (United Kingdom), Latin American Business Center, London

• Jose Padilla
  jpadilla@uk.ey.com

Ernst & Young Tax Co., Latin America Business Center, Tokyo

• Raul Moreno
  raul.moreno@jp.ey.com

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ATTACHMENT

PDF version of this Tax Alert