Uruguay is considered the smallest country on the South American continent. But the small size of the state did not prevent it from obtaining the status “The most prosperous country in Latin America”. Its jurisdiction is considered one of the most stable and safe for entrepreneurs, its geographical location is very profitable. The political direction has not changed for many years, which creates a favorable atmosphere in the cultural, social, and business spheres. The Uruguayan government is interested in capital inflows, so financiers from all over the world consider this country as a profitable business area. If you are among such businessmen, it is possible to become present in this country in one of these forms.

Major Forms of Legal and Business Presence

If you intend to become present in this country, this is possible to arrange in one of these forms:

• limited liability company (Sociedad de Responsabilidad Limitada – SRL);
• joint-stock (or anonymous) society (Sociedad Anónima – SA).

1. 1. Features of registration of SRL:
      • several founders are necessary;
      • the number of partners can be from 2 to 50;
      • the charter determines the validity of the firm, it can be set unlimited;
      • the amount of capital (minimum and maximum) is unlimited.

      The owners of the firms should be prepared for the fact that at the initial stage of the foundation it is necessary to introduce a minimum amount of their share of capital (25%). All manipulations to accept and exclude the partners, change of shares should be coordinated with all the founders without exception.

   2. Features of registration of SA:
      • It is allowed to organize the firms of any kind of activity (special rules only for the financial sphere);
      • the number of shareholders is not limited (at least one);
      • amount of chartered capital may be any (but should correspond to the intended types of activities);
      • responsibility of the shareholders is established in accordance with their shares in the Company (is limited to their value);
      • shares are issued to the bearer or registered;
      • it is allowed to borrow for capital increase;
      • the transfer of capital to the country of registration of the founder is made without restrictions;
      • the main bodies of the company: the Meeting of Shareholders and the Board of Directors;
      • the possibility of opening a bank account in any currency by non-residents.

Features of work in the “Free Economic Zone” and under special modes

The creation of free economic zones is intended to stimulate commercial activity by introducing special tax conditions in a certain territory for industrial and commercial activities. The benefits are valid only if the legally established requirements and the provision of services are complied with. They include exemption from nationwide or local tax obligations. The companies are also exempted from profit taxation outside the free zone if they produce services outside Uruguay.

Trade regimes in the country can be divided into two types:

1. 1. • free from tax burden due to being in a special economic zone;
      • the mode in which the difference between the cost of buying and selling goods and services is calculated and a 0.75% tax is levied on it.

The zero rate of dividend income taxation is applied at the holding mode.

Registration Requirements and Steps

Company formation in Uruguay, an LLC for instance, covers these preliminary registration steps:

1. Defining your business goals, the types of operations you are going to conduct, and the most suitable business structure for those.
2. Choosing and checking a business name.
3. Collecting details about founders, beneficiaries, and management of a future entity.
4. Depositing the part of statutory capital that is compulsory for payment at the moment of registration.
5. Arranging the registered address for a future enterprise.
6. Drafting statutory documents for a future entity.
7. Collecting and submitting all required documents to the registrar.
8. Registering for tax and social security purposes.
9. Applying for and obtaining licenses and special permits (required for certain regulated types of business activities).

Legal and Regulatory Framework

The local legal framework may be assessed as favorable for starting and running a business. The government creates advantageous conditions for foreign investors, including free economic zones.

The company registration process is not bureaucratized and is generally straightforward. The principal legal acts in the area of doing business are the Companies Act and the Capital Markets Act. The major state authorities in the business area are the Register of Legal Entities-National Trade Register Section and the Central Bank of Uruguay.

Tax System of Uruguay

An option of company registration in Uruguay should be assessed along with the following tax highlights associated with the jurisdiction:

• Corporate income tax (CIT) rate – 25%
• Personal income tax rate – (i) residents – progressive scale of rates with the upper one of 36%, (ii) non-residents – 12%
• Value-added tax rates – (i) basic – 22%, (ii) reduced – 10% (applied to certain transactions)
• Withholding tax (for non-residents) – (i) dividends – 0% or 7% , (ii) interests – 0/7/12%, (iii) royalties – 0% or 12%
• Capital gains tax – (i) corporate – subject to the basic CIT rate, (ii) personal – 12% rate may be applied in certain cases.

Advantages of the Jurisdiction

The government of the country does its best to attract investors and tries to create favorable conditions for them. If you intend to incorporate a company in Uruguay, this dealing may be promising to take into account the next benefits of the jurisdiction:

• liberal tax legislation and control;
• democratic orientation of the government policy;
• the basis for the functioning of the sphere of finance – the preservation of banking secrecy;
• constantly improving conditions for offshore business;
• flexible corporate conditions (the regime of bearer shares, there are no distinctions between jurisdictions on payment of dividends, as foreign corporations-residents may act as a director);
• free zones (Colonia, Nueva Palmira, Punta Pereira and others).

How Prifinance Specialists May Help You

We offer prompt company registration and bank account opening services in Uruguay and worldwide. New registration and ready-made options. Provide extensive details for more precise consultations and suggestions that can be effective for your future project.