How to Do Business In Uruguay?

Doing business in Uruguay is facilitated by a stable political and legal environment, which treats foreign and local investors equally. The process of setting up a business involves several legal and administrative steps.

Here is a comprehensive guide on how to do business in Uruguay, covering the incorporation process, legal requirements, and key investment sectors.

1. Company Formation and Registration Process

The most common ways to establish a business presence are by registering a legal entity or, for a faster, lower-risk approach, using an Employer of Record (EOR) to hire local staff without setting up a local entity.

A. Choose a Business Structure

The three most common legal structures are:

• Simplified Joint Stock Company (Sociedad por Acciones Simplificadas – S.A.S.): A modern, flexible option that can be formed by a single shareholder. Liability is limited to the shareholder’s contribution.
• Stock Corporation (Sociedad Anónima – S.A.): The most common legal form for larger businesses. It requires a minimum of two founding members (shareholders), though it can be 100% owned by a sole shareholder after incorporation. Shareholders’ liability is limited to their investment.
• Limited Liability Company (Sociedad de Responsabilidad Limitada – S.R.L.): Often used for small and medium-sized businesses. It requires a minimum of two and a maximum of 50 partners.

B. Step-by-Step Registration Guide

1. Choose and Reserve a Business Name:
   • This step is often recommended, though not mandatory for all structures.
   • You can submit up to three names for clearance through the National Internal Audit Office (AIN). A reserved name is typically held for 60 days.
2. Draft and Approve Company Bylaws/Articles of Incorporation:
   • The bylaws must be drafted, usually with a local lawyer or notary public (Escribano), and must include details like the company name, share capital, registered office address, and management structure.
   • The documents must be submitted to the National Internal Audit Office (AIN) for approval.
3. Register with the National Trade Registry (RNC):
   • Once the bylaws are approved by the AIN, the company must be officially registered with the Registro Nacional de Comercio (RNC).
4. Publish Bylaws Excerpt:
   • An excerpt of the bylaws must be published in the Official Gazette and at least one other national newspaper to formalize the company’s public record.
5. Obtain a Tax Identification Number (RUT):
   • Register your company with the National Tax Administration Office (DGI) and the Social Security Authority (BPS) to obtain your unique taxpayer number (RUT or Registro Único Tributario). This is essential for all official and tax-related transactions.
6. Register with Labor Authorities (if hiring employees):
   • If you plan to hire staff, you must also register with the Ministry of Work and Social Security (MTSS) and the State Insurance Bank (BSE).
7. Register the Ultimate Beneficiary Owner (UBO):
   • To comply with Anti-Money Laundering (AML) regulations, you are required to register the Ultimate Beneficiary Owner with the Central Bank of Uruguay (BCU).
8. Open a Corporate Bank Account:
   • You will need a local bank account in the company’s name for all business transactions.

2. Key Legal and Regulatory Considerations

• Foreign Investment: Uruguay does not discriminate against foreign investors, who are treated equally to nationals. Foreigners are allowed 100% ownership of a company and can freely transfer capital and profits abroad.
• Local Legal Representative: All companies are legally required to appoint a local legal representative who must be a resident of Uruguay (either a national or a foreigner with legal residency).
• Taxation System (Territorial): Uruguay operates a territorial tax system, meaning only income realized within the country is subject to taxation.
  • The Corporate Income Tax (IRAE) rate is generally 25%.
  • New investment projects may be eligible for a widespread tax exemption system, offering reductions in Income Tax, Asset Tax, VAT, and import duties.
  • Setting up in a Free Trade Zone (FTZ) offers significant tax benefits, including exemption from all national taxes in Uruguay (with a few exceptions).
• Corruption and Stability: Uruguay is widely recognized as one of the most politically stable and least corrupt countries in Latin America, with an independent judiciary and strong protection of property rights.

3. Attractive Sectors for Investment

Uruguay’s government actively promotes foreign investment, particularly in sectors where the country has a competitive advantage:

For the most accurate and up-to-date guidance, it is highly recommended to engage a local notary public (Escribano) or a specialized legal and accounting firm in Uruguay.