Uruguay is a South American republic that is formally known as the Oriental Republic of Uruguay (Spanish: Repblica Oriental del Uruguay). It borders Argentina to the west and southwest, Brazil to the north and northeast, and the Rio de la Plata to the south and the Atlantic Ocean to the southeast. Uruguay has a total area of around 176,000 square kilometers (68,000 square miles) and a population of approximately 3.51 million people, of whom 2 million dwell in the metropolitan area of its capital and biggest city, Montevideo.
Hunter–gatherer communities originally settled in what is now Uruguay 13,000 years ago. The Charra people were the main tribe at the time of European arrival, when the Portuguese first constructed Colónia do Sacramento in 1680; Uruguay was colonized by Europeans late in comparison to surrounding nations. Because of conflicting claims to the territory, the Spanish established Montevideo as a military bastion in the early 18th century. Uruguay gained independence between 1811 and 1828, after a four-way fight with Portugal, Spain, and, subsequently, Argentina and Brazil. Throughout the nineteenth century, it was exposed to foreign influence and interference, with the military having a recurrent role in internal affairs. A succession of economic crises and political repression of left-wing guerrilla activities in the late 1960s and early 1970s ended a democratic era that began in the early twentieth century, culminating in the 1973 coup d'état that installed a civic-military dictatorship. The military administration harassed communists, socialists, and political opponents, resulting in many murders and countless cases of torture; the military handed up control to a civilian government in 1985. Uruguay is now a democratic constitutional republic with a president who is both the head of state and the head of government.
Uruguay is a developing nation with a high-income economy that ranks top in Latin America in terms of democracy, peace, corruption perception, and e-government. It ranks #1 in South America in terms of press freedom, middle-class size, and wealth. Uruguay deploys more soldiers to United Nations peacekeeping deployments per capita than any other nation. It is the lowest-ranking South American country on the Global Terrorism Index and ranks second on the continent in terms of economic freedom, income equality, per-capita income, and FDI inflows. Uruguay is the continent's third-best nation in terms of Human Development Index, GDP growth, innovation, and infrastructure. Uruguay is recognized as one of Latin America's most socially progressive nations. It rates well on worldwide indicators of personal rights, tolerance, and inclusion, including acceptance of the LGBT population. Cannabis, same-sex marriage, and abortion are all legal in the nation. Uruguay is a founding member of the United Nations, the Organization of American States, and Mercosur.
After one year of work, employees are entitled to paid vacation time of at least 20 days, with an additional day of vacation time after every four years of service.
There are fourteen national public holidays recognized in Uruguay.
Employees are entitled to up to a year of sick leave. Employees who are eligible for benefits are paid through Uruguay's social security system, the Banco de Previsión Social (BPS).
Maternity leave is compensated for 14 weeks for female employees. The first six weeks of maternity leave can be taken before the baby is born, and the remaining eight weeks can be used once the baby is born.
Paternity leave is compensated for 13 days for the father.
Apart from maternity and paternity leave, there are no provisions in the law in Uruguay regarding parental leave.
Generally, the rights and duties for terminating an employment contract are specified in an individual or collective bargaining agreement. This includes the procedure for terminating an employee and any notice period required.
Employers are not compelled to pay severance for contract breaches, but may be required in other instances. Severance pay is one month's income for each year of service, up to a maximum of six months.
A 1.5-week notice period should be provided.
It is customary to have a probationary period of up to three months.
Employees are entitled to severance pay of up to six months' salary for each year worked.
In Uruguay, the industrial sector's standard working hours are 48 hours per week spread over six days and eight hours per day. The limit in the commercial sector is 44 hours per week and eight hours per day.
In general, overtime hours are compensated at 100% of the standard wage on regular days and at 150% of the standard wage on non-working days such as holidays and Sundays. Overtime hours are limited to eight per week.
Uruguay's minimum wage is 10,000 Uruguayan pesos per month.
The commercial and governmental sectors are both represented in the National Integrated Health System. The Administración de los Servicios de Salud del Estado (ASSE), or State Health Services Administration, is in charge of public health services. In addition to governmental health services, Las Instituciones de Asistencia Médica Colectiva (IAMC), or Collective Medical Care Institutions, are private organizations that offer health services.
Mandatory benefits postulated by law include a probationary period, pay on annual leaves, public holidays, sick leaves, maternity leave, paternity leave, and overtime pay. Statutory benefits also include social security benefits.
Under the source principle, net income generated from commercial operations performed in Uruguay, acquired by legal entities resident in Uruguay and non-residents operating via a permanent establishment (PE) in Uruguay, is taxed at a CIT rate of 25%. (i.e. the territorial system of taxation). As a result, Uruguay exclusively taxes income produced inside its boundaries, revenue generated from property situated within Uruguayan territory, or income obtained from the commercial use of rights within its limits.
All incurred expenditures that are required for the production of Uruguayan-source revenue and that are properly recorded are permitted as deductions in order to calculate net taxable income. Furthermore, taxpayers may deduct expenditures from their gross income if such expenses are taxed (either international or local taxes) in the hands of their counterpart. When the taxes in the hands of their counterpart is less than 25%, a mandatory proportionate deduction must be computed (CIT rate).
Except when revenue is acquired via the activities of a PE in Uruguay, a 12 percent withholding tax (WHT) is levied on Uruguayan-sourced income earned by non-residents.
Individual income tax is imposed on both resident and non-resident persons' earnings. Income generated from activities produced in, property situated in, or rights economically utilized inside Uruguayan territory is taxed on the source principle. However, there are certain circumstances in which money earned outside of Uruguay is taxed (under certain conditions).
In 2010, the IRPF was expanded such that remunerations received by workers for personal services provided outside of Uruguay to local taxpayers are subject to IRPF at progressive rates ranging from 0% to 36%. Furthermore, the IRPF source concept has been expanded to cover revenue generated from technical services. Advertising services performed outside of Uruguay by self-employed people (not on the company's payroll) will henceforth be taxed, providing they produce taxable revenue for local corporate income tax (CIT) reasons.
The IRNR is taxed on Uruguayan gross income at rates ranging from 7% to 25%. Income earned by entities residing, domiciled, or situated in low- or no-tax jurisdictions (LNTJs) is taxed at a rate of 25%. This tax is mostly collected via withholding.
Uruguayan VAT is imposed at a general rate of 22% on the supply of services and the circulation of products within Uruguayan borders. This tax also applies to the import of commodities and the value-added in the building of immovable assets.
The following goods (among others) are either subject to a reduced 10% VAT rate or are completely free from VAT.
Items subject to the 10% VAT rate:
Food and medications
Services provided by hotels.
Health-care services.
The first immovable asset sale.
Items exempt from VAT:
Milk.
Books.
Magazines.
Agricultural machinery.
Certain bank services.
Accessories.
For VAT reasons, exports are zero-rated. VAT on exporters' purchases may be recovered in the form of credit certificates, which can be I used to pay other taxes, (ii) used to pay social security payments, or (iii) endorsed to suppliers who can pay their respective national taxes or social security contributions.
The VAT rate has been lowered for the disposal of goods and services to final consumers under Law 19,210 of financial inclusion and electronic payment methods and associated rules, provided that payment is made using debit cards or electronic money instruments. The current rate cut results in a VAT rate of 18% when the transaction does not exceed roughly 16,000 Uruguayan pesos (UYU), and a 20% charge for activities beyond this amount.
VAT requires monthly payments and may demand monthly or yearly tax reports, depending on the taxpayer's qualification.
The following visas are available to foreign nationals in Uruguay.
Tourism visas are valid for 90 days and enable multiple entries.
Business visas with a validity period of 90 days and multiple entries.
Student visas with a single entry and a 30-day validity period.
Visas for family reunion that allow for a single entrance and are good for 30 days.
Work visas with a 30-day validity period and a single entry.
Humanitarian and emergency visas with a single entry and a 30-day validity period.
To enter Uruguay, foreign workers will need to secure a work visa.
A residence visa will be necessary to stay in the country beyond the first 30-day term.
To apply for residence, the foreigner must first visit Uruguay as a tourist and then apply in person at the country's national immigration office, the Dirección Nacional de Migración (DNM). For each nation you've resided in during the previous five years, you'll need a birth certificate, a marriage certificate, and a police certificate. If you are a US citizen, you will need an FBI report rather than a police report, as well as verifiable evidence of income.
Birth certificates, marriage certificates, and non-Interpol (non-US) police records must be validated by an apostille (an official pre-printed form) attached to the document by the competent authority in the appropriate jurisdiction and translated into Spanish by an official public translator.
The legalized translated birth certificate must also be registered with the Registro de Extranjeros, which will provide the paperwork needed to get the Uruguayan resident ID card.
Aside from these papers, a carné de Salud (Uruguay health card) and a medios de vida are also required (an income certificate). The health card requires a medical examination at an approved facility in Uruguay, and the income certification must demonstrate adequate earnings. An escribano, a Uruguayan legal specialist authorized to issue an income verification certificate, must verify the source and quantity of your income. (Any source of income from overseas, such as a pension, social security, leasing income, or company revenue, is permitted.)
Once the application is submitted and the necessary documents is presented, the foreigner will be designated as a residente en trámite (temporary resident of Uruguay) (a resident in the process). The next step is to travel to the immigration department to get the paperwork needed to obtain the temporary cédula from the Dirección Nacional de Identificación Civil (DNIC). It is common for the full residence application to take roughly a year to be processed.
In Uruguay, employment contracts may be either verbal or written. While there is no legal need to complete an employment contract in writing, it is strongly advised. Collective bargaining agreements control many work arrangements as well.
There is no set length for assignments. This is usually indicated in the employment contract for fixed-term employments.
Uruguay Peso En Unidades Indexadas
While you've most certainly put a lot of effort into your growth, there are numerous more factors to consider when setting up a Uruguay subsidiary. The first step in learning how to set up a Uruguay subsidiary is to choose a site. Your city or area in Uruguay has an influence on how you set up your subsidiary. Some places, for example, have stronger Uruguay subsidiary laws, which might make incorporation simpler. If you are unfamiliar with the country's many locales and rules, always work through a third party.
Another part of the Uruguay subsidiary formation procedure is the kind of company you choose for incorporation. A limited liability company (LLC), a public limited company, a free trade zone corporation, a representative office, or a branch are your alternatives. Each company has its own set of Uruguay subsidiary rules and regulations, thus your option is determined by the sort of activities you want to do in while in the nation. Many businesses form as an LLC because it provides the greatest flexibility to function in the nation.
The following are the stages to forming an LLC:
1. Holding a meeting with a public notary in which you discuss the participants' identities as well as the firm name, registered office, operations carried out, and other details.
2. Adding a Business to the National Trade Register
3. Publication of your registration in the Official Gazette or a different publication
4. Using the one-stop business solution to submit all papers
5. Purchasing Occupational Injuries and Illnesses insurance from the State Insurance Bank
6. Working with the Inspector General of Employment and Social Security to complete the whole setup procedure.
Regardless of the form of corporation chosen, every firm must adhere to Uruguay subsidiary legislation. A minimum of two shareholders and one director are required for an LLC, who might be people or businesses. Individuals of any nationality are welcome to apply, and they are not need to reside in Uruguay in order to work for your firm. For the incorporation procedure, you'll also require at least one share capital in any currency.
If you don't have any employees or customers in the nation, you may utilize your LLC as a legally tax-exempt firm. If you do, you must open a corporate bank account in the nation and comply with all relevant tax rules.
