Uruguay is a country located in the southeastern region of South America. It borders Brazil to its north and east, Argentina to its west, and the Atlantic Ocean to the southeast with the Río de la Plata (River of Silver) to the south. It is officially called the “Oriental Republic of Uruguay”. Uruguay has an estimated 3.4 million people where 1.7 million live in the metropolitan area of its capitol and largest city, Montevideo. Its land area is approximately 68,000 square miles (176,000 square kilometers). Geographically, Uruguay is the second-smallest country in South America.
Since 1991, Uruguay began following the International Reporting Standards (IFRS). To further meet these requirements, Uruguay created the Financial Statements Registry in 2001. Afterwards, the mandatory IRFS application standards were adapted in 2004.
Benefits
Uruguay corporations receive many benefits including:
• No Taxes on Worldwide Income: There are no taxes on foreign assets or worldwide income, and no taxes on distribution of dividends. The only taxes are on profits earned inside its borders. However, U.S. citizens and residents of countries taxing worldwide income are required to report all income to their tax authorities.
• Two Shareholders: Only one director and two shareholders are required for incorporation in Uruguay. There is no limit on the number of directors or shareholders a corporation can have. Directors and shareholders do not need to be residents of Uruguay.
• No Minimum Capital Value: There is no minimum capital value requirement for corporations in Uruguay.
• U.S. Dollars and Euros: The United States Dollar and the Euro are both widely accepted in Uruguay.
• Political and Economic Stability: Uruguay has excellent political and institutional stability, the best literacy rate in Latin American, and its economy is becoming much more open and liberal.
• Strategic Location: Uruguay is strategically located in South America, giving it an advantage in this market.
• Capital Gains Tax Exemption: Uruguay offers capital tax exemption for the financial assets of non-residents.
• Limited Liability: The shareholder’s liability in Uruguay corporations is generally limited to his or her paid-up capital.
• Bearer Shares: Corporate shares in Uruguay were bearer or nominative. But now with the anti money laundering atmosphere, one must register the names of the beneficial owners.
• High Income Population: Uruguay possesses the highest income distribution in Latin America.
Corporate Name
Uruguay corporations must select a unique name that is not similar to already existing corporation names. Typically, three versions of the business name are submitted with the hope that one of them will be approved.
Office Address and Local Agent
Uruguay corporations must have a local registered agent and a local office address. This address will be used for process service requests and legal notices.
Shareholders
Uruguay corporations must have at least two shareholders. There is no maximum number of shareholders a corporation can have. Shareholders do not need to be residents of Uruguay.
Directors and Officers
Uruguay corporations must have at least one director. There is no maximum number of directors for corporations. Directors do not need to be residents of Uruguay.
Authorized Capital
Uruguay corporations have no minimum authorized capital requirements.
Taxes
Income tax: the only income that will be taxed is income earned in Uruguay. Offshore income and assets are not taxed in Uruguay.
Other taxes in Uruguay are levied as follows:
- Corporate income tax IRAE (Commercial Activities) – This tax rate applies if the income derives in Uruguay. If that is the case, then a flat tax rate of 25% is applied to the net income (profits).
- Federal Net Worth Tax of – At the end of each fiscal year, a net worth flat tax of 1.5% is applied to all net worth stemming from Uruguay. However, assets that are placed outside of Uruguay’s jurisdiction will not be taxed.
- ICOSA (Corporations Control Tax) – This is an annual flat rate tax estimated at $520 USD that is applied at the end of each fiscal year. Offshore corporations, however, are exempt from this tax.
- VAT (Value Added Tax) – The VAT tax rate in Uruguay is 22%. This tax is only applied to the circulation of goods or services in Uruguay.
Double Taxation: Uruguay has signed general treaties to prevent double taxation with Argentina, Ecuador, Finland, Germany, Hungary, Malta, Mexico, India, Portugal, Spain, and South Korea and treaties with some other countries are in the process of negotiation.
Annual Fees
Uruguay corporations can expect to pay annual renewal fees of UYU 12,000.
Public Records
In Uruguay, information about a corporation’s beneficial owner and shareholders are never available to the public.
Accounting and Audit Requirements
Corporations in Uruguay need to maintain records of their daily transactions in order to disclose their finances with accuracy if requested. The records can be completed using computer sheets, and also must be certified by the National Register of Commerce within 180 days from the closing balance sheet. If computer records are not used, then the books need to have been certified by the National Register of Commerce.
All accounting records need to be maintained in local currency, with the exception of offshore companies who may keep their records in foreign currency. Records need to include both shareholder and board of directors’ meetings.
In addition, an audit is compulsory for banks and “open” corporations only, meaning corporations that have their shares offered on the open market. “Closed” private corporations must have their balance sheets audited.
Annual General Meeting
An annual general meeting is required of Uruguay corporations, but these meetings do not have to be held in Uruguay. Meetings for Uruguay corporations can be held anywhere in the world.
Time Required for Incorporation
Uruguay corporations can expect the entire process to take about nine weeks. This completion time depends on the turnaround with the corporate name registration, as well as, how accurately the corporation completes its registration documents.
Shelf Corporations
Shelf corporations are available in Uruguay for faster incorporation.
Conclusion
Uruguay offers several benefits for its corporation including: no taxation of worldwide income, only two shareholders required to incorporate, no minimum capital value, U.S. Dollars and Euros are readily accepted, political and economic stability in a strategic location for the South American market, limited liability for shareholders, and the option to issue bearer shares for shareholders’ privacy
