Company registration in Uruguay (SAZF)

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 the financiers from all over the world consider this country as a profitable business area.

Business etiquette of Uruguayans is characterized by the following features:

• the gifts do not affect the outcome of the transaction, the desire to give a present should be sincere;
• expensive chocolate is usually given to the business partners, or flowers (mostly roses, only not white);
• men are usually dressed in classic dark suits, and women in a skirt and blouse at business meetings.

Why is it profitable to register a company in Uruguay?

The government of the country does its best to attract investors and tries to create favorable conditions for them. The main advantages of the registration of a legal entity in Uruguay:

• liberal tax legislation;
• democratic orientation of the government policy;
• the basis for the functioning of the sphere of finance – the preservation of banking secrecy;
• lack of tax control;
• 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, Carrasco and others).

Possible forms of company registration

You can register the following types of companies in the country:

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

Let’s consider briefly the features of operation of each type.

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 company can be managed by a legal entity established by its partners;
   • 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 (50%), and pay the rest during 2 years. 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);
   • 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;
   • responsibility of the shareholders is established in accordance with their shares in the Company;
   • 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 in the foreign market. 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:

• 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.

Standard tax regime

The tax policy for the firms registered in Uruguay is formed in such a way that only those profits that are received on the territory of the country will be taxed. The rate will be 25 percent. There is no dividend tax which attracts shareholders. The financial reports and forms are issued every year.