Entities that might benefit from these tax incentives should review the requirements in the Decree.

Through Decree No. 352/015 (December 22, 2015), Uruguay has implemented the tax incentives for entities that display films, enacted as part of the Investment Promotion Law (Law No. 16,906). The Decree was published in the Official Gazette on January 8, 2016.

The incentives may be granted to:

a. Enterprises whose main activity is the display of films

b. Non-profit public or private institutions or organizations that display films as their main activity

To qualify for the incentives, entities:

— Cannot collect anything for the digital reconversion of Uruguayan cinematographic works and a minimum of three foreign movies per distribution company per year (provided the distribution company specializes in the commercialization of independent cinema)

— Cannot have collected anything for the display of Uruguayan works and a minimum of three foreign movies per distribution company per year

If collections are verified, the entity will have to reassess the import duties and pay the exempted duties and taxes, plus the corresponding penalties.

Under the Decree, such entities would be exempt from the Customs Unique Tax on Import, the duty on the mobilization of packages, the consular fee and, in general, all duties and taxes on import, including VAT, of equipment for image projection, lighting, sound and other equipment related directly to the activity of film exhibition in theaters, provided the goods are non-competitive with the Uruguayan industry (i.e., they have a declaration from the National Industry Agency of the Industry, Energy and Mining Ministry). The incentives apply until January 8, 2019 (three years from the Decree's publication).

An entity that displays films should file a tax return with the National Industry Agency of the Industry, Energy and Mining Ministry. The return should contain an explanation of the entity's activity and a record of its registration with the Registry of the Cinema and Audio-visual Institute of Uruguay of the Education and Culture Ministry, as well as the declaration previously mentioned stating that the goods are non-competitive with the Uruguayan industry.

Depending on the magnitude of the activities to be performed, control procedures might be established and financial and accounting information could be requested.

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