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Offshore corporations in a changing offshore world. Alternative tax havens and offshore strategies. Offshore corporations in a changing offshore world. Alternative tax havens and offshore strategies.


• SAFI or SAZF Company
• Little-known, low profile option
• Tax free (SAZF) or low tax (SAFI)
• Corporate anonymity possible

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with Michael Isaacson

When asked about Uruguay, most folks will reward the questioner with either a blank expression or confuse it with Paraguay -- another South American nation, one that has unfortunate historical connections with dictators and Nazi war criminals.

Officially Oriental Republic of Uruguay, the country is situated on the southeastern coast of South America, bordered by Argentina and Brazil (the "Oriental" designates the country's position on the eastern shore of the Uruguay River).

A nation of just over three million, Uruguay is recognised for its political stability and advanced social legislation. Uruguay has long been a favoured playground for well-heeled Argentineans and boasts some excellent ocean-side resorts (Punta del Este) and a relaxed lifestyle.

All of this aside, Uruguay has two other attractive features: banking secrecy "which would put the Swiss to shame" (to quote The Economist magazine) and offshore company legislation.

SAFI: Uruguay's original offshore company

Uruguay's offshore company legislation dates back to 1948 when Sociedad Anonima Financiera de Inversion -- or SAFI -- came into being.

SAFI has many of the attractions of a typical tax haven corporation:

  • SAFI directors and shareholders may be of any nationality. Whilst a single director is sufficient, there must be at least two shareholders.
  • There is no requirement that the beneficial owner is revealed to any governmental authority. Bearer shares are permitted.
  • Paid-up capital requirements are set at a minimum of $2,500.

So far so good, but the SAFI has one aspect not traditionally associated with offshore brass-plate companies: A SAFI must, like all Uruguayan companies, file financial statements, and a local accountant must audit these. Said financial statements are then published locally and presented to the tax authorities. However, the only reason for the tax declaration is to validate the calculation and payment of an annual licence fee.

The actual amount of the annual licence fee that a SAFI must pay is determined from a taxable base, which is calculated as equity plus profit and reserves, plus liabilities less equity multiplied by two. The licence fee is then calculated against the base at a rate of 0.3% (zero point three). The maintenance of an adequate ratio of assets to capital allows the reduction of the tax to a value equivalent to an annual 0.1% of the corporate assets.

The licence fee essentially means that a SAFI is not tax-free -- but it is certainly tax competitive.

Whilst the owners of the SAFI can remain anonymous, it must be noted that the annual publication of the SAFI's accounts opens the company's assets to public scrutiny.

SAZF: Uruguay's tax-free company

But the age-old SAFI is not all that Uruguay has to offer: Year 1987 saw the arrival of the SAZF -- the Uruguayan Free Trade Zone Corporation.

SAZF has a few benefits over its older relative, including exemption from all taxes through the "Total Tax Exemption System", plus a removal of the need to file accounts.

Nevertheless, the company is still expected to keep accounting records; legislation prescribes the minimal set of books the company should keep.

The capital and accounting entries may be expressed in any currency. At the end of every fiscal year, the company is required to draw up the corresponding balance sheet and refer it to the Shareholders' Meeting.

As a stable democracy without exchange controls, Uruguay certainly is a good base for Latin American operations -- and more.

Your own offshore bank in Uruguay?

It is not widely known that Uruguay also allows a relatively straightforward incorporation of offshore banks -- known locally as a Institucion Financiera Externa or IFE for short.

The minimum authorised share capital for an IFE is US$ 500,000. The bank is exempt from any tax on any activity, line of business, income or its assets. Interestingly, it also does not require a local registered agent.

Uruguayan offshore banks can carry out any form of banking activity (such as offering all types of current and deposit accounts, including foreign currency accounts); however, they can only conduct business with non-residents.

Nostro or correspondent accounts can be held at the Central Bank of Uruguay or at other institutions overseas. Uruguay does not suffer from the usual tainted appearance of a traditional Caribbean offshore haven, and IFEs usually receive a fairly friendly reception when submitting applications for correspondent status.


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