Uruguay is known as a reputable offshore jurisdiction and is one of the most stable financial sectors in South America, therefore Uruguayan companies like Sociedad Anónima (SA) or Socieded de Responsabilidad Limitada (SRL) are very popular vehicles to hold foreign assets or conduct international business.
Uruguay is often categorized as a tax haven and is an investor-friendly country with freedom of convertibility of currency, steady growth of GNP, business transparency and Free Trade Zones legislation.
The most commonly used corporate form of an offshore company in Uruguay is Sociedad Anónima (SA). This type of company does not have any operative limitations of business activity and no minimum capital requirements.
The Sociedad Anónima (SA) is an offshore company limited by shares and free to hold assets which can conduct business anywhere in the world, including Uruguay. As a general rule any legal or natural person, resident or nonresident can be shareholder or director to the SA company.
The only income subject to taxation in Uruguay is that which is derived from a Uruguayan source. Foreign sources of income or assets are not taxed.
The major taxes of Uruguayan Tax System are as follows:
Corporate income tax IRAE (Commercial Activities Tax or “Impuesto a la Renta de Actividades Empresariales”) – The IRAE taxes income of Uruguayan source. The rate of the tax is 25% over the net income. In case there is no income of Uruguayan source the tax shall not apply.
Federal Net Worth Tax of “Impuesto al Patrimonio”- The net worth tax at a standard rate of 1,5% is imposed on the net worth located in Uruguay at the end of the fiscal year. The assets located outside Uruguay are not subject to this tax and shall only apply in case the SA has assets in Uruguay.
ICOSA (Corporations Control Tax or “Impuesto de Control de las Sociedades Anónima”) – This tax is fixed annual flat tax of approximately USD 520 applicable at the time of foundation and at the end of each fiscal year. This tax does not apply to branches of foreign companies.
VAT (Value Added Tax) – The basic VAT rate is 22%. The VAT only applies to the circulation of goods or services in Uruguay.
Uruguay has signed general treaties to prevent double taxation with Germany, Hungary, Mexico, Ecuador, Finland, Argentina, India, Malta, Portugal, South Korea and Spain and treaties with some other countries are in the process of negotiation.
Company names prohibited without relevant license: “Bank”, “Buildings Society”, “Savings”, “Loans”, “Trust”, “Insurance”, “Assurance”, ”Re-Insurance”, “Fund Management”, “Investment Fund”, “Fiduciary”, “Broker”.
The founders must approve the bylaws, which, in turn, must be approved by the National Internal Audit Office, registered at the Public Trade Registry, publishing in the Official Gazette. The constitution proceedings may take several months. The company should be registered at the General Tax Office, the Social Security Bureau and the Ministry of Labor.
Due to long formation procedure and delays, instead of undertaking these constitution proceedings, it is possible to acquire a shelf corporation with no previous activity. Gaining control over “off the shelf” corporation is simple matter of obtaining the transfer of shares and appointing a new Board of Directors. In this case the acquisition process is quick and can be completed within one week.
Thanks to its strategic location in South America, political and institutional stability, highest literacy rate in Latin America and the opening and liberalization of its economy, Uruguay has become an important regional business and financial center with solid reputation. The main business principles valid in the country are:
There are 13 Free Zones, including two government-managed, which are highly attractive for any type of industrial or foreign trade activity. The Free Zone law guarantees all the exemptions and benefits of total exemption from national taxes, social security contributions and surcharges.
The main business opportunities for international investments can be very attractive in following industries:
Uruguay is a member of most international organizations, including International Bank of Reconstruction and Development, Southern Cone Common Market (MERCOSUR), UN, UNESCO, WTO, WIPO, etc.
Uruguay holds a leading position in Latin America in level of democracy and lack of corruption, quality of living and e-government.
The official language in Uruguay is Spanish. A low proficiency of English language is a barrier for conducting international business in the country.
The Uruguayan peso (UYU) is the official currency.