Uruguay is South America's only low-tax, offshore jurisdiction but is not generally considered an offshore haven. Uruguay's offshore corporations, regulated by Law 11,073 of 1948, have a beneficial tax treatment and provide anonymity for their shareholders, elements that allow for an efficient protection of assets and income.

Known as "SAFIs", for the Spanish acronym for "Financial Investment Corporations".  These offshore corporations:

·  Require minimal integration of capital
·  Guarantee anonymity for shareholders
·  Have a very favorable tax treatment
·  Are considered a very reliable and respected
   vehicle internationally
·  Can operate freely

The range of permitted activities of the SAFI offshore corporations

SAFIs' corporate purpose is broad. The law allows them to "invest in securities, bonds, shares, notes, debentures, treasury notes or bills, any type of property or good, including real estate".  This investment / ownership can be done directly or indirectly, for its own purpose or on behalf of a third party. It is this factor in particular which has received attention from knowledgeable operators, since it in effect allows for investment and financial activity to be carried out on behalf of third parties.  This broad interpretation has lead to many using these companies for investment and other private fiduciary services where third party funds are being managed.  This of course may not have been the intent of the original framers of the 1948 law but the text is clear and unambiguous.

The only restriction (and this defines their offshore nature) is that the majority (more than 50%) of the investment / ownership must be outside of Uruguay. Thus, for example, a SAFI may be utilized to own shares of various companies, but these companies cannot be Uruguayan companies. At least more than 50% must be shares of non-Uruguayan companies.

It is important to notice, however, that to benefit from the favorable tax treatment that characterizes offshore corporations, all of the investment / ownership must be in goods outside of Uruguay, and this is usually the case for using SAFIs.  An important issue is that SAFIs can freely open bank accounts, in foreign currency, in any bank within Uruguay and that SAFIs may seek and obtain authorization to operate as offshore banks and may provide services within Uruguay. This of course would be subject to meeting all the paid in capital and other requirements of Uruguay’s banking laws.


Off-shore corporations' preferential tax treatment

The main advantage offered by SAFIs is the special tax treatment they are granted. Unlike regular corporations incorporated in Uruguay, SAFIs have no income tax of any kind, or any tax on any of the goods it owns. The only tax a SAFI must pay is an annual tax of 0.3% of its net worth. For all practical purposes, this tax can be reduced even more according to the SAFI's chosen capital structure and so according to the amount of debt the company carries, the tax can be reduced.


A SAFIs' type and amount of required capital

A SAFI's equity can represented in the form of bearer shares like Panama, although nominative shares can be issued if the owner wishes. The SAFI need not have more than one shareholder and it may be one or many persons or companies. As with all corporations liability is limited, and thus not extendable to shareholders beyond the capital invested in the company. SAFIs have an "authorized capital" stated in their by-laws, of which the law requires that only 5% be paid up.  This is usually done when the company is incorporated and then funds are removed and is a service provided automatically by the incorporator.  Incorporating a new company can take a couple of months or more and so unused “shelf” companies are readily available.


Legal obligations of a SAFI

A SAFI's obligations are minimal and simple. The corporation must:
·  Have accounting books of the company
·  Prepare annual financial statements of the company (but not of its shareholders)
·  Pay the annual tax, once a year
·  Hold an annual shareholders' meeting to approve the financial statements

The presence of the SAFI's owners (shareholders) are not required for any of these activities.which are provided for by our law firm for the sum of $1500 per annum. Please contact us if you are interested in purchasing a SAFI. Since incorporation can take several months, unused shelf companies are typically what clients purchase, the price of which can vary depending on current availability as well as age and authorized capital.

Summary

There are many uses to which a SAFI can be put to, that would normally require a more specialized licence.  The key of course would depend on where the operations office is physically located since local laws may conflict. Examples of businesses being operated as SAFI’s:

1. Investment fund management
2. Investment trading operations
3. Fiduciary services
4. Securities transactions on behalf of third parties
5. Banking services related activities
6. Debit/credit card issuance and management
7. Foreign Exchange activities

New legislation as of May 2007 prevents the formation of any further SAFI’s, however we still have access to unused bearer share “shelf” SAFI’s.  As of 2010 all SAFI’s become ordinary Uruguay Corporations.  The main impetus for this was an agreement amongst the Mercosur countries of South America for no special tax-free structures to be offered by any member country.  It is not known yet what the new tax regime will be for SAFI’s that become non-resident Uruguay companies, especially since many countries in the world including  the U.K. and the U.S. offer structures that essentially are tax-free if operated by foreigners who are not doing business in the actual country of formation.  Regardless of what the outcome may be, a SAFI could still be a useful and inexpensive option to consider as a stepping stone to a more complex financial institution structure.