Doing Business in Uruguay

Starting in the mid-2000s, the Uruguayan government began making reforms and offering incentives to help it attract foreign investment. While some of these policies created struggles in the short term, the long-term effects are still being felt today. 

The World Bank has given Uruguay a very good score of 89.6% for ease of starting a business, ranking it as the number 66 country in the world. Setting up a corporation (called an SA or Sociedad Anónima in Spanish), can take as few as six-and-a-half days right in the capital. This procedure includes only five major steps like reserving a name and notarizing the company’s signatures and bylaws.  

Most foreign investors seeking to register entities in Uruguay will choose to open either an SA or SAU (Sociedad Anónima Uruguay), the equivalent of a private limited liability company. In either case, the rules are quite liberal – the directors and shareholders of these entities can be of any nationality and are not required to be resident in Uruguay. 

The CIT (corporate income tax) rate in Uruguay is moderately high and is used as a source of revenue for the country’s extensive social programs. This rate is 25% on net income. However, no local income taxes can be collected by municipalities, so this is the extent of basic corporate tax obligations. VAT is generally levied at 22%, though some goods and services may be reduced to just 10% (health and hotel services, food, medicine) or become completely VAT-free (agricultural machinery, some banking services).

As a highly socialized state, Uruguay has created strong protections for workers that are generally very well respected. The minimum wage in Uruguay is, however, relatively low compared to many other industrialized countries at 22,751.22 UYU (Uruguayan pesos)/month (around 500 USD/month). Employers, however, do need to provide a lot of mandatory benefits for their Uruguayan workers. This includes five paid public holidays and at least 20 days of annual leave. Industrial workers can work only eight hours a day but up to 48 hours per week while commercial workers can work just forty-four hours. Employees can work up to eight hours of overtime per week but these hours must be paid at the rate of 200% of normal wages on regular working days and 250% on rest days or holidays. Employers also have to contribute an extra 12.625% of workers’ salaries to the Banco de Previsión Social (BPS), Uruguay’s social security authority. Employees are deducted between 18.1% and 23.1% of their salaries for the same.