Registration of financial statements before the AIN of Uruguay
Article 4 minute read

Registration of financial statements before the AIN of Uruguay

07 July 2016

Last month, the Executive Power of Uruguay, through decree 156/016, regulated the aspects related to the recording of financial statements before the National Internal Audit.

Regulations that establish the registration obligation

Originally, the obligation to record financial statements was foreseen for commercial companies through article 97 (bis) of Law 16.060 of 1989. This article establishes that companies, regardless of their type, must register their financial statements with the state body of control.

The obligation was later extended, through article 24 of Law 18,930 of 2012, to:

  • civil societies and associations
  • foundations, cooperatives
  • agricultural societies and associations
  • trusts and investment funds not subject to regulation by the Central Bank of Uruguay
  • non-resident entities that operate in the national territory through permanent establishment or that are located in the country, the direction and control of all their activities

The aforementioned rules delegated to the Executive Branch the regulation of the amount of assets and / or income from which the obligation to register arose, the setting of the term in which they must register and the sanctions that must be applied for the breach of the obligation to register, as well as the prohibition to distribute profits without prior registration.

Main aspects contained in decree 156/016

This decree seeks to regulate all aspects related to the recording of financial statements, including:

Internal Audit of the Nation (AIN)

It is established that the accounting records will be in charge of the AIN, as a state control body, and will have the following functions:

  • establish the formalities and conditions required for the presentation of the financial statements before the Register of Financial Statements
  • receive and record financial statements formulated in accordance with the appropriate accounting standards, as well as the required documentation
  • issue certificates certifying the recording of financial statements
  • provide interested parties who request a copy of the registered information
  • respond to inquiries made by interested parties
  • apply the sanctions provided in case of non-compliance.

In this sense, the AIN has already published a resolution indicating that the entities obliged to register their financial statements will do so through the Central Electronic Balances portal (CBe).

The financial statements must be submitted with a certification of a Public Accountant or equivalent, authorized for exercise in the national territory. The report must have the digital signature of said professional.

In the same way, it is established that the financial statements must include the digital signatures of the representative or representatives of the obligor, which will have the character of a sworn statement of their status as such.

Obligation to register according to income

They must register their validly issued financial statements and, if applicable, approved:

  • when the income from its ordinary activities, at the end of each fiscal year, exceeds 26,300,000 Indexed Units₁ (equivalent to approximately US $ 2,914,000); or
  • when they obtain income that exceeds 4,000,000 Indexed Units at the close of each fiscal year (equivalent to approximately US $ 443,000), provided that at least 90% of them generate income that is not from Uruguayan sources.

To such effects, in both cases the income generated in the previous year should be considered. In the event that this exercise covers a period of less than twelve months, the income must be proportionate to a full year.

Deadlines and prohibitions

The term for the recording of the financial statements will be 180 calendar days, counted from the day following the closing date of the fiscal year.

Those obliged, by their nature, can distribute profits₂, they will not be able to do so until they fulfill the obligation to register within the established period.

Fines for non-compliance

The following fines by the AIN will be applicable in case of non-compliance: Failure to comply with the obligation to register in time:

  1. a fine of 2,000 Indexed Units (equivalent to approximately US $ 220) will be applied
  2. in the case of repeated non-compliance over a period of five calendar years, a fine of 3,000 Indexed Units (equivalent to approximately US $ 330) will be applied, which will not be cumulative with that of subparagraph
  3. non-compliance with the prohibition to distribute profits: a) A fine of 125,000 Indexed Units (equivalent to approximately US $ 13,850) will be applied
  4. in the case of repeated non-compliance in a period of five calendar years, a fine of 250,000 Indexed Units (equivalent to approximately US $ 27,700) will be applied, which will not be cumulative with that of subparagraph
  5. the applicable fines may not exceed the value equivalent to 10,000 Resettable Units (equivalent to approximately US $ 294,000).

Once the notification of the penalty is issued, the AIN will inform the General Tax Directorate about those in breach. For this purpose, the DGI will suspend the validity of the annual certificate issued.

Entry into force

For commercial companies, this regime will be valid for fiscal years ending on June 13, 2016. For the remaining entities, this regime will be in effect for fiscal years beginning on or after January 1, 2016.

Contact our experts at TMF Uruguay for more information.

 

₁ The value of the Indexed Unit applicable will be that in effect at the closing date of the fiscal year.
₂ Distribution of profits will be understood as the payment of dividends or their equivalents, according to the nature of the obligor.

Written by

Fernanda Pintos

Accounting manager, TMF Uruguay

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