Company Formation & Tax in Uruguay
South America's most stable and transparent economy — a 25% corporate tax on local income, a largely territorial base, and world-class free zones that anchor regional services and logistics.
Uruguay applies a 25% corporate income tax (IRAE) on Uruguayan-source income under a system that is largely territorial — most foreign-source income falls outside the tax net, subject to specific rules on certain passive income. Add a 22% VAT, a stable dollar-friendly economy, a strong rule of law and some of Latin America's best free-zone and holding regimes, and Uruguay has become a favoured base for regional headquarters, shared-service centres and holding structures.
The headline numbers
| Tax | Rate |
|---|---|
| Corporate income tax (IRAE) | 25% |
| VAT (IVA) standard | 22% |
| VAT reduced | 10% |
| Dividend withholding | 7% |
| Free-zone corporate income tax | Exempt (qualifying users) |
IRAE applies to Uruguayan-source business income at 25%; distributions carry a 7% dividend withholding. VAT is 22% standard, with a 10% reduced rate on certain essentials. Qualifying free-zone users are exempt from most national taxes on their in-zone activity.
What makes Uruguay work
- Largely territorial base — most foreign-source income is untaxed, with defined exceptions for certain foreign passive income.
- Free zones (Zonas Francas) — users benefit from a broad exemption from national taxes on qualifying in-zone activity, a mainstay for shared services, software and logistics.
- Holding and tax-residency incentives — regimes and tax-holiday windows attract new residents and regional holding companies.
- Stability and transparency — investment-grade, low-corruption, and fully compliant with international exchange-of-information standards.
Forming the company
The traditional vehicle is the Sociedad Anónima (S.A.); the newer Sociedad por Acciones Simplificada (SAS) — introduced to simplify formation — allows a single shareholder, flexible governance and faster electronic setup, and has become the default for founders. Registration runs through the National Internal Audit Office (AIN) and the National Trade Registry, with RUT enrolment at the DGI and BPS social-security registration. 100% foreign ownership is permitted; nominative shares and beneficial-ownership disclosure apply. Free-zone operations require a separate user contract and approval.
Frequently asked questions
What is Uruguay's corporate tax rate in 2026?
25% (IRAE) on Uruguayan-source business income. Qualifying free-zone users are exempt from most national taxes on in-zone activity.
Is Uruguay a territorial tax system?
Largely — most foreign-source income is outside the tax net, though specific rules apply to certain foreign passive income.
What is the VAT rate in Uruguay?
22% standard, with a 10% reduced rate on certain essential goods and services.
Can a foreigner own a Uruguayan company fully?
Yes — 100% foreign ownership is permitted. An SAS can be formed with a single shareholder, and beneficial-ownership disclosure applies.
Official sources
- DGI — corporate income tax and VAT
- Auditoría Interna de la Nación — company oversight
- Uruguay XXI — investment promotion and free zones
This guide is general information prepared by A.R.M. Management and is current as at July 2026. It is not legal or tax advice; territoriality and free-zone eligibility carry conditions and rules change. Confirm against the DGI, or with an advisor, before acting.
Structure a Uruguayan company the right way.
A.R.M. Management advises founders, investors and holding structures on Uruguayan incorporation, free-zone regimes and territorial planning across South America. Begin with a confidential conversation.