How to Register a Sole Proprietorship in Uruguay

The Southeastern region of South America brings us the Oriental Republic of Uruguay. This country is known for its culture, climate, the great city of Montevideo, and its free-market economy. Uruguay's economy grew by 4.4% in 2021, after a drop the previous year due to the COVID-19 pandemic. This growth sustained at 4.8% in 2022, and is expected to follow suit in 2023".

Disclaimer: This article is not a substitute for legal advice. Please always check official websites or seek legal advice before you take action.

Sole proprietorship in Uruguay

The 'Unipersonal' has just one person in-charged that both establishes and runs the business. This business structure has multiple benefits: it is easy to create, the healthcare of the owner is included in tax payments, and it can have no employees or many of them. Also, if you are willing to collect all the business' profit, the sole proprietorship is the way to go. The following article will help you with the needed information for registering with the authorities.

How to register a sole proprietorship

To register as a sole proprietor, the only needed document is your national ID, and it does not have any additional costs. The primary thing is to register at the Tax Administration. You can do the procedure online or in person at the Registry of Taxpayers and Companies. While applying, you will need to attach the following documentation:

• Two copies of your ID
• Notary certificate and two copies

The notary certificate must state the following:

• Signature of the holder
• Owner data: Name must be established
• Identification document
• Marital status
• Nationality
• Legal capacity
• Home address
• Tax domicile specifying between which streets it is located. This address corresponds to the place where the activity the business takes place

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Registering for tax and the taxation system

You have to register the sole proprietorship in Direction General Impositiva (DGI- Tax Office) and Banco de Prevision Social (BPS) by completing forms 351 and 205 and submitting them to the aforementioned agencies. 

Value-added tax for selling goods and services is 22%, income tax is at a 12% rate, and the health contribution is a maximum of 8%. You can invoice up to 641,946 Uruguayan pesos (approximately 22,000 US Dollars) per annum.

The corporate tax in Uruguay is 25% of the fiscal profit.

In the case of small and medium-sized companies, it is possible to pay taxes taking the sales solely into accounting. This regime is called the Simplified Tax Regime, and the effective tax rate varies between 3.3% and 18%, depending on the type of activity carried out by the company.