Why should you choose Uruguay as your next destination for business?

Uruguay is a country located in Latin America characterized by its political, democratic and social stability throughout the last forty years, which has generated the ideal context for the development of successful businesses and foreign investments. Its differential with respect to the rest of the countries throughout the region, is materialized in the rankings made by prestigious organizations, such as the ONG Transparency International or the World Economic Forum. Uruguay has become a regional hub due to its geographically strategic location and for having positioned itself as a country of reference in terms of reliability, stability and firmness in the financial system.

Uruguay has been a leader in its energy transition policies towards renewable sources, as well as in the creation and implementation of several regulations aimed to prevent money laundering and financing of terrorism. It has also been a pioneer in the legalization of a variety of social rights, as a result of its remarkable progressiveness.

Uruguayan legislation has maintained a strong focus on the promotion of new public and private policies aimed at achieving a globally integrated economy open to new investments from all over the world in a wide range of areas, from the audiovisual sector to new technologies in livestock and agribusiness, including cannabis and cellulose.

The structural factors that have kept Uruguay in an outstanding and favorable position for new investments are mainly - the fact of having clear rules for business; its political and macroeconomic stability; its financial and commercial openness; the existence of an attractive set of investment incentives reflected on its regulation, applicable to both citizens and foreigners; an adequate climate and infrastructure; the presence of qualified human capital, and also the fact of having celebrated several bilateral agreements to avoid double taxation with several countries all over the world.

How did the Uruguayan government handle the health crisis due to the virus SARS COV – 19?

Uruguay has experienced a long period of economic growth throughout the last years and has shown resilience not only to the region's instability, but also to an unfortunate situation such as the worldwide health crisis derived from virus SARS COV - 19. Actions and facts such as, its macroeconomic soundness, the application of prudent public policies (Uruguay was one of the few countries that did not establish mandatory quarantine for its population, nor did it completely close its borders, but maintained a sensitive approach to the care of its population in harmony with its economic stability), its export diversification, a reduced banking sector vulnerabilities and wide reserves, all of which allowed Uruguay to preserve its stability in a more adverse global and regional environment.

The changes in international investment trends caused by the pandemic crisis constituted an opportunity for Uruguay, to the extent that its institutional quality and resilience were valued in the search for investment destinations.

If you could summarize Uruguayan’s monetary system, what are the most relevant facts to take into consideration?

The Central Bank of Uruguay maintains price stability as its main objective, in order to preserve the value of the currency, and therefore the purchasing power of the Uruguayan peso.

To achieve this, the Bank applies an inflation targeting regime, whereby it undertakes to make every effort to keep inflation within the target range established by the Uruguayan Macroeconomic Coordination Committee.

A stable currency contributes to output growth, economic and social development, employment generation and maintaining the value of the income of Uruguayan citizens. A low inflation environment allows economic agents to foresee the future with less uncertainty and to make better economic and financial decisions (savings, investment and consumption, among others).

The currency exchange market in Uruguay is known for being very active, given that there are favorable conditions for capital inflows and outflows. It maintains a free foreign exchange market, as well as important tax advantages. Banking transactions can be carried out in foreign currency originating anywhere in the world and both companies and individuals can operate with local bank accounts in foreign currency.

Uruguayan current regulation states that financial institutions may not disclose confidential information of individuals, except in very exceptional cases such as, for example, the request of a judicial authority for an ongoing litigation.

Act Nº 19.210 created the concept of electronic money, which generated greater transparency in the country along with greater regularity of payments. As of today, all money transfers which exceeds approximately the amount of USD 100,000 must be made through electronic means, which generates sufficient confidence in the fulfilment of payments for investors and providers of goods and services.

Also, interest rates are capped by the Law on Interest Rates and Usury, whereby interest rates cannot exceed certain established maximums.

Finally, regarding the repatriations of profits and capital, they can be made without any prior authorization, except for the proceedings of money laundering’ controls.

Are there any differences when it comes to investing for a Uruguayan citizen compared to a foreign citizen?

The applicable policy regarding the admission and treatment of investments, made by foreign investors, shall be the same as that accorded to local investors.

Except for specific exceptions, a foreign investor may carry out any type of activity under the same conditions as a local investor, with the same incentives and benefits (including legal, regulatory and even tax). Also, there is no tax discrimination or restrictions for transferring profits abroad and there are no minimum or maximum investment values to obtain such benefits.

A special investment incentive regulation has been established in Uruguay, which includes a series of tax exemptions for private investors who invest in fixed assets and achieve objectives such as: job creation, increase of exports, decentralization, care of the environment, among others.

Also, Uruguay has an automatic exemption regime for investment, which is applied to those who carry out industrial or agricultural activities and at the same time are taxpayers, if such assumptions apply, they will be beneficiaries of automatic exemptions on goods directly destined to the productive cycle, the necessary equipment for electronic data processing and also all those goods and products necessary for their operation to be carried out properly.

Notwithstanding the aforementioned, Uruguay also has a specific investment regime based on investment projects duly presented by private investors. The investment projects are submitted for approval by the Ministry of Economy, which acts under transparent procedures, previously established by law and duly regulated.

Free Trade Zones, how are they suitable for new business?

The development of Free Trade Zones was declared of national interest by Uruguayan regulation, with the aim of promoting investment, diversifying the productive matrix, generating qualified employment, increasing national added value, boosting activities with a high technological content, promoting the decentralization of economic activities, and in general terms, encourage the insertion of Uruguay in the fluctuation of international trade of goods and services, along with international investment flows.

Free Trade Zones consist on specific areas duly determined by Uruguayan authorities in which it is possible to carry out all kinds of industrial, commercial and service activities totally exempted from taxes. Nowadays we have eleven and another one being in process of set up in Punta del Este, mainly for audiovisual activities -.

In order to be able to carry out these activities, it is necessary for the investor to apply for the status of direct or indirect user of a Free Trade Zone and to have the due approval of the “Free Trade Zone Area”. This procedure is neither bureaucratic nor time-consuming.

Free Trade Zone users are exempted from all national and municipal taxes currently existing or to be created, in relation with the activities carried out in the Free Trade Zones. In particular, they are exempt from Income Tax, Value Added Tax, Net Worth Tax and Excise Tax and Corporation Control Tax.

Approximately 1,500 companies operate there nowadays and around 45% carry out trade-related activities, followed by those developed in the professional services sector.