General Information

Montevideo, founded by the Spanish in 1726 as a military stronghold, soon took advantage of its natural harbor to become an important commercial center. Claimed by Argentina but annexed by Brazil in 1821, Uruguay declared its independence four years later and secured its freedom in 1828 after a three-year struggle. The administrations of President Jose BATLLE in the early 20th century established widespread political, social, and economic reforms that established a statist tradition.

A violent Marxist urban guerrilla movement named the Tupamaros, launched in the late 1960s, led Uruguay's president to cede control of the government to the military in 1973. By yearend, the rebels had been crushed, but the military continued to expand its hold over the government. Civilian rule was not restored until 1985. In 2004, the left-of-center Frente Amplio Coalition won national elections that effectively ended 170 years of political control previously held by the Colorado and Blanco parties. Uruguay's political and labor conditions are among the freest on the continent.

Uruguay is located on the Atlantic coast of South America, bordered by Brazil in the north-east and Argentina in the West, and has a total landmass of 176,215 sq km. The population of Uruguay is approximately 3.3 million people of European origin, mainly from Spain and Italy. 40% of the population live in Montevideo, the capital and its suburbs. Uruguay is a Republic. The Executive Branch is in the hands of the President and his Cabinet. The Legislative Branch is composed of the Senate and the House of Representatives. Justice is exercised by Judges and Courts of Justice and the Supreme Court of Justice.

Uruguay's well-to-do economy is characterized by an export-oriented agricultural sector, a well-educated work force, and high levels of social spending. After averaging growth of 5% annually during 1996-98, in 1999-2002 the economy suffered a major downturn, stemming largely from the spillover effects of the economic problems of its large neighbors, Argentina and Brazil. For instance, in 2001-02 Argentina made massive withdrawals of dollars deposited in Uruguayan banks, which led to a plunge in the Uruguayan peso and a massive rise in unemployment.

Total GDP in these four years dropped by nearly 20%, with 2002 the worst year due to the banking crisis. The unemployment rate rose to nearly 20% in 2002, inflation surged, and the burden of external debt doubled. Cooperation with the IMF helped stem the damage. A debt swap with private-sector creditors in 2003 extended the maturity dates on nearly half of Uruguay's then $11.3 billion of public debt and helped restore public confidence. The economy grew about 12% in 2004 as a result of high commodity prices for Uruguayan exports, a competitive peso, growth in the region, and low international interest rates, and it continued to grow nearly 7% annually in 2005 and 2006.

The official and spoken Language is Spanish. Many Uruguayans also speak English and other European languages. The official currency is the Peso. There are no exchange controls. The type of Law Civil Law based on Napoleonic Code and Spanish Civil Law. The principal Corporate Legislation Companies Act, Law 16,060 enacted September 1989. Offshore Companies Act. Law 11,073 enacted 1947.

Company Information

The type of Company for International Trade and Investment Offshore Companies, which are called SAFI (Sociedad Financiera de Inversion).

The procedure to incorporate consists of submission of constitution together with forms signed by two founders to obtain approval. Registration in the Public Registry and publication in the Official Gazette and a public newspaper. Type of company is stated in the Constitution.

A SAFI cannot trade within Uruguay, and may not own real estate there. SAFI companies may not undertake the businesses of banking or fund management, offer investment advice or undertake any other activity, which may, by association, suggest an association with the banking industry. They can't solicit funds from the public, or offer their shares for sale to the public.

A company incorporated in Uruguay has all the powers of a natural person. The language of legislation and corporate documents is Spanish, but foreign language translations may be obtained. A registered office is required and must be maintained in Uruguay. All statutory records, including registers of directors, members, charges and the minute book must be held at the registered office. Shelf companies are available.

The time to incorporate is about 30 days. Restrictions apply on a name that is similar or identical to an existing company, a name that is known to exist elsewhere, a name that in the opinion of the Registrar is undesirable or offensive and a name that implies illegal activities or implies government patronage. The name can be in any language which uses the Latin alphabet, but the Registrar may request a Spanish translation.

The following names require consent or licence: bank, buildings society, savings, loans, trust, fund management, investment fund, fiduciary, broker or their foreign language equivalents. The suffix to denote limited liability is SAFI (Sociedad Financiera de Inversion). There is no disclosure of beneficial ownership to government authorities.

Compliance

The minimum authorised capital is US$ 50,000 of which 5% (US$ 2,500) must be paid up at the time of incorporation. The capital can be in any currency, and the capital duty is payable in Uruguayan Pesos based on the exchange rate applicable on the date of incorporation.

The following classes of shares are permitted: registered shares, preference shares, bearer shares and shares with or without voting rights.

Tax, which has to be paid within four months of the end of the company's fiscal year, is calculated on the basis of shareholder's equity and the company's liabilities, as follows: shareholders equity + (liabilities - shareholders equity x 2) =taxable base. Tax = taxable base x 0.3%. Uruguay has entered into double tax agreements with Germany and Hungary. There are no licence fees.

All Uruguay companies must prepare financial statements, which have to be audited by a local CPA. These financial statements are published in the Official Gazette and presented to the tax authorities to ensure that the correct amount of licence fee has been paid over.

The minimum number of directors is one. They can be natural persons or bodies corporate. They can be of any nationality and need not be resident in Uruguay.

Although there is no statutory requirement for a Uruguay company secretary a Uruguay company may have a company secretary appointed. They can be natural persons or bodies corporate. They can be of any nationality and need not be resident in Uruguay.

The minimum number of shareholders is one. They can be natural persons or bodies corporate. They can be of any nationality and need not be resident in Uruguay.

Free Trade Zone Companies

The Uruguayan Free Trade Zones regulatory framework is established by law number 15.921 of December 1987. There are a number of FTZ's. Montevideo's FTZ, which is near the airport, is one of the most preferred locations for non-Uruguayan companies. The Montevideo FTZ has developed into an important business and commercial centre in which other multinational corporations have established operations.

FTZ corporations are exempt from all Uruguayan taxes, either present or future. Freedom to repatriate capital and profits is guaranteed by law. Uruguayan employees must pay social security contributions but foreign employees of FTZ companies may be exempted.

FTZ corporations may not engage in any type of industrial, service or other business activities within Uruguay. FTZ corporations are typically used for: executing industrial or manufacturing activities, warehousing and distribution, carrying out trading activities, rendering financial and professional advisory services and financial investment management.