The government announced a series of measures to deepen support for micro and small businesses, within the framework of the rendering of accounts on the management of the year 2022 carried out by the President of the Republic Luis Lacalle before the General Assembly in the Legislative Palace.
These measures, which will impact 35,150 small businesses and imply a tax waiver of some USD 40 million, have been highly requested by the sector, according to the president of the National Development Agency (ANDE), Carmen Sánchez.
The objective is to improve their financial situation and promote formality, through a gradual and more flexible tax system, which adjusts to the situation of smaller companies.
The measures involve:
The modification of the IRAE (Income Tax from Economic Activities) regime, going from a fixed rate scheme, according to income level, to a progressive rate scheme (regime similar to Personal Income Tax, something long requested by these companies) . This benefits 37% of IRAE taxpayers, which corresponds to some 26,600 companies.
Greater flexibility for companies that pay taxes as “Small Business”. When their income exceeds 305,000 Indexed Units (UI) in a year and therefore they must pay IRAE and VAT, they no longer have to remain in the general regime for the following two years. This will impact some 2,700 companies.
Increase the income limit to be a taxpayer of IMEBA (Tax on the Alienation of Agricultural Goods). The cap will go from 2 million Indexed Units (UI) to 2.5 million UI ($14.1 million).
The forgiveness of debts generated since March 2020 by MIDES Monotributistas who are ex officio suspended in the BPS, until the date of promulgation of the law.
For the president of the National Development Agency Carmen Sánchez, “these measures reflect the needs of companies. Some of them were in high demand. For example, the billing of the IRAE in bands. That is to say that now, depending on the billing, the companies are going to have different bands of contributions. The gradualness and greater flexibility that the measures aim to generate in the IRAE are fundamental so that companies do not stagnate and can grow,” added Sánchez. “This is particularly relevant when considering the productivity gap that MSMEs have in relation to large companies, their high turnover (and in particular the high mortality rate) and low dynamism.” According to data from ANDE’s Mipymes Monitor, this sector comprises 99.6% of the companies in Uruguay, and generates two thirds of the jobs in the private sector, but its participation in total sales is only 21 %. On the other hand, 1 in 3 of these companies was not active the previous year or will not be active the following year; and half of the companies that are born in a year, after 3 years, have already disappeared. Finally, only one in a hundred and less than one in a thousand of the companies born as micro, after 5 years, manages to grow to medium or large, respectively. Regarding the MIDES Monotributistas, Sánchez explained that “after the pandemic there were many who could not continue contributing to regularize their situation. Now the debt is forgiven and they will be able to return to formality.
These measures are added to those already implemented previously, which have to do with the modification of the “Small Business” tax regime; temporary tax reductions for MSMEs, with special emphasis on the sectors most affected by COVID 19; and the gradual contribution regime for Monotributistas with start of activities from 2021.
