Published legislation and draft legislation - Uruguay

Regulations to help the rural sector

Acts 19.595 and 19.596

On 16 February, the Uruguayan government promulgated Act 19.596 which creates the Guarantee Fund for Milk Producers’ Debts (FGDPL), to help debt restructuring for producers in the sector.

The Fund will also open up access to loans for technology reconversion, given that as they pay off their guaranteed obligations, the unused funds made available can be applied as collateral for programs to improve sector efficiency and competitiveness.

To be eligible for a subsidy from the Fund and with a view to improving the restructuring of existing credits with financial institutions or suppliers of agricultural goods and services, the level of indebtedness entailed in the industrialization process may not go over the limit set in the regulation; to this end, a debt ratio per liter of milk produced has been set.

The Fund, which is controlled by the Ministry of Stockbreeding, Agriculture & Fisheries and the Ministry of Economy & Finance, will be financed, as well as by donations and legacies, by means of a deduction collected by the pasteurizing plants. These will deposit the sums collected in the central bank, Banco de la República*.

The FGDPL will have a start-up capital of USD 36 million, of which 27 million will be used on restructuring loans with the financial sector, the industry and suppliers of agricultural services; 3 million will be invested in a dependent fund to smooth price fluctuations, and the remaining 6 million will be distributed to farmers with an annual production of under 480 million liters, who will each receive a subsidy of at least USD500.

In order to promote the agricultural sector, the Government has also passed Act 19.595, a VAT rebate for rural producers on their purchases of diesel. Producers of milk, rice, flowers, fruit and vegetables can get a rebate on the value added tax paid on diesel used for these activities, provided they are not eligible to pay income tax (IRAE). This measure will require a document validating eligibility, come into effect on 1 March and last one year.

Sheep and beef producers are also eligible for this subsidy with the passing of Act E/915, 26 February, which requires at least 0.4% of a producer’s income to come from this type of stockbreeding in order to be eligible.

 

* The law stipulates a fine equivalent to 20% of the sums not deposited, plus a surcharge for late payment, payable by pasteurizing plants that do not comply with this obligation.