Register A Business in Uruguay, A Tiny Country With An Upright Economy
People usually overlook Uruguay for its size, but this nation progresses in so many ways unknown to many. It has a respectable GDP, non-existent poverty level, and a satisfactory way of living for its inhabitants. These factors might tempt you to register a business in Uruguay but read further.
Small but terrible, Uruguay is definitely not a nation to be messed with. It has the highest percentage of middle-class residents among all Latin American countries, amounting to 60% It’s also considered a high-earning country with exceptional infrastructure and education. Because of Uruguay’s size, the government maintains its political stability, lessening levels of corruption within the most substantial establishments.
It’s noteworthy that many foreign businesses have started executing commercial activities in this nation. Some either expand or register a business in Uruguay due to its egalitarian economy. As a result, its GDP has increased by 3.31% in 2018, according to the World Bank Group.
Uruguay’s Main Business Sectors
Uruguay’s economic activity is divided into three main sectors: agriculture, industry, and services. Other smaller sectors include tourism, mining, and telecommunications.
Agricultural and Industrial Sector
The largest field for Uruguayan exports comes from the agricultural sector, contributing to 7.5% of the GDP. It employs around 10% of the working population. The fishing industry occupies mainly a major share in this rate, and the rest is divided into livestock breeding and food products, such as rice and wheat.
The industrial sector accounts for 20.6% of Uruguay’s GDP and hires more than 20% of the working population. The most significant industrial fields are food processing of animals and agricultural products. Other mentionable fields are wine, leather, and textile production.
In GDP terms, Uruguay benefits the most in their service sector, contributing to 71.9% of the financial output and employing 70% of the working population.
Due to Uruguay’s rich culture and breathtaking attractions, the tourism service field serves as the most vital area of the services sector. According to Carlos Fagetti, the director of National Tourism, Uruguay welcomed more than 4 million tourists in 2017, which is expected to even increase this year. This cultural opportunity offered by the largest cities creates a diversification of investments from other foreign countries.
The financial sector is also a contributing factor to Uruguay’s economic growth. This is due to a very clear and regulated framework set by the government. Other reasons include openness to foreign currency procedures and a high amount of capital transactions. Its stock market is continuously growing since 2006, which is very attractive to foreign and local investors alike. When you register a business in Uruguay, you need to be vigilant of these movements as they will impact your company overall.
Business Types in Uruguay
Uruguay usually hosts small and medium-sized enterprises, with more than 170,000 SMEs offering jobs for 60% of the working population. Find out which one is more optimal for your business as we depict the three most prevalent Uruguayan company types and their characteristics.
Corporation (Sociedad Anónima – S.A.)
Normally, a corporation requires a minimum of two founding members, who can be either Uruguayan residents or foreigners. In addition, there is a board of directors that takes care of the management functions. Members of the board can either be local or foreign individuals with domicile inside or outside of Uruguay. A substantial benefit of corporations is that they have no boundaries as to the activities they conducted, except in cases where they directed financial and insurance operations.
There are two types of corporations:
Open Corporations: These are companies that utilize public savings or have listed shares on the Montevideo Stock Exchange (BVM).
Closed Corporations: These companies have a limited number of shareholders. They do not openly trade their stocks on the BVM.
Limited Liability Partnerships (Sociedad de Responsibilidad Limitada – S.R.L.)
An S.R.L. is the most widely used business type in Uruguay. Typically, these companies arise from a parent SME which in theory employs them. Similar to corporations, Limited Liability Partnerships have no limitations in conducting activities except for financial and insurance operations. As for its foundation, there should be a minimum of 2 members to a maximum of 50 partners.
Steps on How To Register a Business in Uruguay
As long as you have the requirements, knowledge, and guidance, you can register a company in Uruguayu quickly. It has a straightforward approach, with no minimum amount of capital required. The only exception is when the nature of your company focuses on financial and/or insurance activities. Here are the incorporation steps you need to take note:
- The National Audit Office (AIN) has to approve your company bylaws.
- The National Trade Register (RNC) has to register the bylaws.
- Normally, you need to wait before a publication from the Official Gazette or any public newspaper has been made, in the form of an excerpt.
- After publication, you need to register your company in the following entities:
- The National Tax Administration Office (DGI) – for the unique taxpayer number (RUT)
- Ministry of Work and Social Security (MTSS)
- Social Security Administration (BPS)
- State Insurance Bank (BSE)
You have to register with MTSS, BPS, and BSE in case your company wants to hire personnel.
Foreign Branch Offices
You can either form an independent local company in Uruguay or establish an extension of your parent company originating from another country. The latter is hypothetically free to accomplish any business activities in the country. However, it must follow the flow of operations directed by the parent company. In any case, the incorporation is almost similar to Corporations and Limited Liability Partnerships.
Upon a foreign branch office’s registry with the National Trade Register (RNC), it must indicate the parent company’s name, domicile, capital, and its managers. Moreover, registries in the MTSS, BPS, and BSE are mandatory for its employment of workers.
Ready To Register A Business in Uruguay?
Uruguay is a nation with interesting business opportunities for both small and large companies. While the incorporation process is quick and easy, they can be confusing if you have no adequate knowledge of local Uruguayan law or policy.
To ensure success in forming and incorporating your business, we recommend you to work with a local group. Biz Latin Hub has the familiarity and proficiency in Uruguay and Latin America’s legal, political, economic, and financial functions. We will offer your personalized advice for your concerns. Don’t hesitate to contact us for more information regarding the company formation process.