Mild climate, beautiful beaches, friendly and educated people, and no tax on worldwide income – Uruguay has the right to be called one of the most attractive tax havens in the world. Situated between Argentina and Brazil, Uruguay has a population of over 3 million people. Despite its relatively small territory, Uruguay is one of the most politically, economically and socially developed countries in Latin America.
Uruguay is an attractive destination for residence and business investments due to several reasons.
To begin with, the country has a well-developed social security, education, and health systems. As a result of the free and easy accessible public education, which is compulsory for children between 6 and 14 years old, Uruguay has the highest literacy rate in Latin America. Due to its educated workforce, Uruguay stands out with a high per capita income, the largest middle class in the region, and a low level of poverty.
Besides, the government supports the well-being of the Uruguayan residents by assuring a well-developed public infrastructure and a high speed of the Internet.
Furthermore, the culture of Uruguay is marked with inclusiveness and tolerance. For example, liberal state laws legalize marijuana and allow same-sex marriage.
The factors that stand out mostly are Uruguay’s strong economic performance, low levels of corruption, solid banking system, attractive tax rates, and prominent investment opportunities. The Word Bank ranks Uruguay a high-income country with a gross national income per capita of USD 16.360, the highest in Latin America.
Uruguay has a welcoming policy concerning foreigners who would like to live, work, or invest in the country. The procedure of obtaining permanent residency in Uruguay is not complicated and usually lasts about 12 months. In order to become a resident, the applicant has to provide the National Migration Office of Uruguay with the following translated and legalized documents: (1) two ID photos, (2) a declaration of income, (3) a health certificate, (4) a document indicating the exact date of the entry in the country, (5) a criminal records certificate, (6) a passport, (7) a birth certificate, and (8) a proof of address provided by a police station.
Uruguay also maintains a friendly business environment. The country is a paradise for businesses that receive income from non-Uruguayan sources. Once established in Uruguay, a company pays a corporate income tax only on income from Uruguayan sources. In other words, income received from outside Uruguay is not taxable.
Uruguayan law does not differentiate between local and foreign investors, thus creating a positive climate for business investments. Foreign investors are allowed to freely establish enterprises and engage in trade activities. For example, the Investment Promotion Law grants automatic benefits for investment, such as exemptions from Corporate Income Tax, VAT, and Wealth Tax.
In order to stimulate business investments and create work places, Uruguayan government also established several free trade zones. Companies operating in those zones are not subject to any domestic taxes (e.g., VAT, corporate income tax, import duties), except social security contributions. The companies that would like to conduct their business activities in the free trade zones must assure that 75% of their staff is Uruguayan citizens. Depending on the zone, businesses can perform IT, logistics, manufacturing, storage, and other operations. Global companies like Sony, Epson, Sabre, Merrill Lynch operate in the Uruguayan free trade zones and use their benefits.
The most common practice to set up an offshore business in Uruguay is buying an already incorporated holding company (Sociedad Anónima). It allows the investor to start operating immediately, thus saving the time for registering a new company. The price of purchasing this type of company is USD 4.000-5.000. Sociedad Anónima does not define the number of shareholders and does not require an investment of capital.
It is important to mention that Uruguay is one of the major players in the software development industry in Latin America. The Uruguayan government stimulates the growth of the industry by not imposing VAT and corporate income tax on the exported software. In addition, the country has a long-standing tradition in ICT education and tax incentives allowing the Uruguayan ICT sector be a leader in the region.
Uruguay is a convenient place to invest in real estate (including agricultural land). The real estate market in Uruguay grows rapidly – about 8 % per year. Foreigners, both individuals and corporations, are allowed to purchase, own, and sell immovable property under the same rules as Uruguayan citizens. Thus, in Montevideo, foreigners constitute about 30% of all buyers of real estate. The annual real estate taxes are low and vary from 0,2% to 0,5 % of the real estate value.
Uruguay is also a suitable place for farming activities due to its good-quality soil and climate. The country is well known for its exports of agricultural production, such as soybeans, diary products, beef, and rice.
To sum it up, Uruguay, the richest state in Latin America, can become a ticket to a life without taxes for individuals and companies that are seeking for a favorable tax environment. Enterprises that receive income from non-Uruguayan sources can enjoy 0% corporate tax, thus increasing their profits to a maximum extent. The country is also a convenient place to live and establish a family. It offers a well-maintained infrastructure, modern laws, a developed social security system, and a European-like culture.