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Uruguay Info · Joined: 01 Dec 2006 Posts: 17 Home Country: uruguay

DOING BUSINESS IN URUGUAY

STARTING A BUSINESS

STANDARDIZED COMPANY
Legal Form: Sociedad anonima (SA)
Minimum Capital Requirement: 840,524
City: Montevideo

Registration Requirements:

Procedure 1. Notarize company Articles of Association and signatures

Time to complete: 1 day

Cost to complete: 0.5% of capital, minimum 40 U.R.

Comment: The cost of notarization depends on the capital of the company, normally is 0.5% of the capital plus notary taxes 18.5%, plus VAT (23% of the fees), with a minimum fee of 40 U.R. (Re-adjustable Units). The Re-adjustable Unit value (U.R.) is published in a monthly basis. As of January 2006, the value of the UR is Pesos 274.42.

Procedure 2. Obtain approval of company bylaws from the Auditoría Interna de la Nación

Time to complete: 24 days

Cost to complete: UYU 25.25

Comment: The SA bylaws needs the approval of the Internal Auditing Bureau ("IAB" or "Auditoría Interna de la Nación"), which is the state entity that controls corporations in Uruguay. The IAB offers to interested parties "standard" by-laws, which cost 20 U.R.. These by-laws have to be signed by the founders of the company and their signatures have to be notarized.
The procedure takes from 20 to 30 days.

Procedure 3. Register with the National Registry of Commerce (Registro Nacional de Comercio)

Time to complete: 7 days

Cost to complete: approx USD 133 (approx USD 33 registration, approx USD 100 registering company books)

Comment: Once approved by the Auditoría Interna de la Nación, the bylaws must be registered before the National Registry of Commerce. The following books are mandatory and need to be sealed by the National Registry of Commerce: 1)Journal, 2) Inventory Book, 3) Letter Copybook, 4) Minutes of Board Meetings, 5) Minutes of Shareholders Meetings, and 6) Stock Ledger and 7) Shareholders Meeting Attendance Book.

Procedure 4. Publish summary in the Official Gazette

Time to complete: 3 days

Cost to complete: USD 130

Comment: The company needs to apply for the publication itself.

Procedure 5*. Publish summary in one local newspaper

Time to complete: 3 days (simultaneous with previous procedure)

Cost to complete: USD 25-120

Procedure 6. Notary Public picks up application forms at the Tax Administration (Direccion General Impositiva) and certify the form after it is signed by founders

Time to complete: 1 day

Cost to complete: USD 42

Comment: Certification is required for the signatures of the company founders that have to be in the corresponding form given by the DGI along with a certificate of the good standing of the company. The cost for the certification of the signatures of 2 founders and of the good standing of the company would be approx $42 (notary taxes included).

Procedure 7. Registration with the Tax Administration (Direccion General Impositiva) and the Social Security Bank (Banco de Previsión Social, BPS)

Time to complete: 2 days

Cost to complete: 1.5% of capital + USD 2

Comment: In addition to the corporate income tax, there is VAT and a Net Equity tax, no separate registration. At the time of the set up of the company a Corporation Control Tax has to be paid at a rate of 1.5% calculated over corporations' minimum face capital. If the company is registered as a "small company" (Pequeña empresa) taxes to be paid are a specific tax for small companies and the Corporations Control Tax. The DGI form, as well as the BPS form, can be obtained free from each institution. The founders (usually the notary public of the company or the accountant) pick them up from the institutions.

Social security registration is comprehensive, covering retirement pensions, health insurance, sick pay, and unemployment. All social insurance in Uruguay is compulsory. Registration can now be done through a single registration form which can be obtained online through DGI.

Procedure 8. Purchase the "Libros de Trabajo" (Labour Book) from the bookstore

Time to complete: 1 day

Cost to complete: USD 2

Comment: The "Libros de Trabajo" contain any working problems, accidents, special timetables; information on inspections made by the Labour and Social Security General Inspection, etc.

Procedure 9. Purchase the working act ("planilla de trabajo") and register payroll at the Ministry of Labour (MTSS)

Time to complete: 2 days

Cost to complete: USD 23 (for planilla de trabajo)

Comment: The Ministry of Labor requires two documents: the payroll ("planilla de trabajo") and the "Libros de Trabajo" (Labour Book). The payroll ("planilla de trabajo") is the document where employees are listed with their salaries, dates, when they started to work, working time, fees, etc. It is bought in the MTSS. The payroll can be submitted to the Ministry of Labour in a written form or in a diskette. Companies with over four employees cannot submit their payrolls in a written form. It should be renewed each year in case the company has employees.

Procedure 10. File for workplace accident insurance of employees with the State Insurance Bank

Time to complete: 1 day

Cost to complete: no charge

Comment: The registration for the accident insurance of employees is made at the "Banco de Seguros del Estado".The filing can be made with a declaration the same day. Cost of the workplace accident insurance will depend on the activity and the number of employees.

Note: Procedures sometimes take place simultaneously. Instances of this are marked with an asterisk (*).

TAXATION

Corporate tax

Main rate: 30%

Resident and non-resident companies are taxed only on Uruguayan-source income. The corporate tax is charged at a flat rate of 30%. Dividends paid between resident companies are exempt. Foreign dividends and other foreign income are not taxable. Non-residents without a branch or permanent establishment in Uruguay that derive certain types of income from Uruguay are taxed by withholding, but are not taxed on interest or capital gains.

Individual tax

No personal tax, but social security contributions at progressive rates to 24.125%

There is no personal income tax in Uruguay. However, employers are required to contribute a percentage of monthly payroll to the social security fund. There is also a payroll tax at progressive rates to 6% in respect of wages and salaries. The total contributions deducted from wages and salaries can therefore rise to 24.125%. A tax reform plan, including the introduction of a comprehensive personal income tax, is under consideration.

Capital gains

Company gains taxed as income

Capital gains of businesses, including branches of foreign companies, are taxed as ordinary income, but gains derived by individuals are not subject to tax. Non-residents without a branch or permanent establishment in Uruguay are not taxed on capital gains arising in Uruguay.

Indirect tax

VAT standard rate: 23% Lower rate: 14%

Value-added tax (VAT) applies to most transactions at the standard rate of 23%. A lower 14% rate applies to basic foodstuffs and other essentials, accommodation services of hotels, fruit, flowers and horticultural products in their natural state, and road passenger transport. Exemptions include the transfer and rental of immovable property, certain machinery, goods and raw materials for use in agriculture, qualifying banking operations, medical services and the import of crude oil. Special rules apply to farming. Registration is compulsory for businesses.

Tax administration and compliance

Tax year:
Corporations: accounting year;
Individuals: calendar year.

Businesses make monthly prepayments of tax, based on the tax liability for the previous year or on estimates of the current year’s liability. Businesses must submit a self-assessment tax return within four months of the end of the accounting period, and final tax is payable by the same date. Social security contributions of individuals are deducted from employment income.

Additional tax information

Withholding taxes: Dividends, Royalties and Technical service fees 30%, Interest 0%.

Tax treaties: Uruguay has concluded two tax treaties (with Germany and Hungary).

Dividends: Dividends are exempt.

Revenue protection: There is no transfer-pricing or anti-tax-haven legislation. However, a tax reform plan that includes transfer-pricing rules is under consideration.

Groups: There are no provisions for group taxation.

Incentives: Fishing; forestry; export promotion; mining; industrial promotion; tourism; free zones.

Other taxes: Bank assets tax, Excise duties, Farming tax, Immovable property tax, Import and export duties, Net worth tax, Personal services to public entities tax, Special insurance businesses tax, Specific consumption tax.

hemanthmallu

Respected

I am an Indian national, one of my friend advised to visit Uruguay, and he described as the country is a peaceful and filled with good humans. I went through the internet for more information and i am very much impressed with the people living in Uruguay.

I am in India now, i have some money to invest in a small business. If i want to start a small restaurant, what are all the formalities to be fulfilled by me. And how many days it will take to complete the government documents. First of all is it possible to invest in Uruguay.

Please kindly help me and guide me how to start the process.

Thank you very much


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