Montevideo, Uruguay

Why are Foreign Companies Choosing to Do Business in Uruguay?

Find out the benefits and incentives to do business in Uruguay in 2020. Despite turbulent economic times in Latin America due to COVID-19 restrictions, Uruguay remains an increasingly popular destination for expanding businesses.

Uruguay is a small country with approximately 3,500,000 inhabitants. It is a founding member of Mercosur and for the last decade its political and economic stability has attracted the attention of foreign investors seeking to incorporate a company and do business in Uruguay.

In Uruguay, foreign direct investment (FDI) has reached record levels, making the country one of the top receivers of FDI, in terms of GDP in South America. This growth in foreign investment is associated to its attractive free zones, free trade agreements, as well as its participation in Mercosur, ALADI and other regional blocks.

Uruguayan flag.
Doing business in Uruguay is promising in 2020 given its pro-investment policies.

Doing business in Uruguay

The country has a pro-investment policy that eliminates restrictions on the use of foreign capital, allowing for free movement of capital and bank secrecy.

In September 2019, the creation of a new legal entity, a Sociedad Anónima Simplificada, or SAS, sought to boost business in Uruguay. This new structure minimizes the costs of incorporation, streamlines the process of creating companies in Uruguay by promoting the use of digital platforms in all phases of the process, and allows companies already incorporated in the country to transform their legal entity to a SAS.

Laws that promote business in Uruguay

The Uruguayan government is constantly working on creating new incentives to encourage investment in the country through a series of laws and reforms. Here are some of the most important laws to in keep in mind while doing business in Uruguay:

Law for the Protection and Promotion of National and Foreign Investments

Law 16.906 was approved in 1998 with the main objective of providing equal conditions for national and foreign investors. Additionally, the law states there is no restriction on the transfer of profits abroad and a series of tax incentives are applied to both local and foreign investors.

Some of the most attractive tax incentives for companies doing business in Uruguay are:

  • Exemption from Tax on Income from Economic Activities (IRAE) if requirements specially demanded in the law are met
  • Exemption from Wealth Tax (IP) for civil works of approximate duration of 10 years
  • Refund of the Value Tax through credit certificates.

Special Regime of Free Economic Zones

The Special Regime of Free Economic Zones has as its main objective to promote investments, generate employment, promote activities with high technological content and innovation, and favor the country’s insertion in the dynamics of international trade of goods and services, among others.

Uruguay currently has 11 free economic zones, most of them located in the metropolitan area, Montevideo. The companies that settle in these zones of Uruguay have an almost absolute tax exemption, with the only exception of the contribution of social security to their workers.

Goods, services, merchandise and raw materials can be imported and exported to and from the free economic zones exempt from any tax. Additionally, the business creation processes within these zones in Uruguay only take 9 weeks. Compared to other free economic zones in the world, this is a highly competitive duration of time for the formation of a company. This allows you to more quickly start doing business in Uruguay.

There are several specialized and suitable zones offering the latest technology and the greatest ease for the provision of your services. Some of the best known are:

  • Aguada Park
  • Zone America
  • Science Park
  • World Trade Center Free Zone.

Foreign business and investment in the technology sector

5G technology for doing business in Uruguay
Uruguay became the first country in Latin America to launch 5G technology, thus advancing its infrastructure for doing business in the country.

Uruguay’s modern technological infrastructure and skilled labor position it as a technological leader in Latin America. This has attracted many companies in the technology sector to do business in Uruguay.

One of the best examples of foreign multinational interest in the country is Google, who in 2019 announced its installation in the country with the construction of its data center in the Science Park free economic zone.

In April 2019, Uruguay became the first country in Latin America to launch 5G technology in its territory. The implementation of this technology is crucial for the development of artificial intelligence and big data management. In this sense, it is notable that Uruguay is taking the initiative for its implementation.

Technology companies interested in doing business in Uruguay and using the country as a platform for its global expansion can take advantage of the following factors:

  • World-class solutions
  • Start-ups and an innovative entrepreneurship ecosystem
  • Committed, competitive and highly qualified STEM talent
  • ICT Exports 100% exempt from Income Tax.

Depending on the activities carried out by technology companies, they are now eligible for certain additional tax exemptions supporting their growth, attracting new companies to invest and do business in Uruguay.

Biz Latin Hub supports you to expand your business in Uruguay

The beneficial Uruguayan market allows investors easy access to international markets, free economic zones, growing industries and tax incentives, thus maximizing the profitability of their business.

At Biz Latin Hub, we help entrepreneurs and multinationals enter the Uruguayan market and carry out their commercial operations in compliance with the law. Our local team of attorneys and accountants can assist you with legal representation, company incorporation, visa services, and more.

Contact us here at Biz Latin Hub for personalized information on how we can help you expand your business in Uruguay and Latin America.

Infographic: 6 Steps to Form a Company in Uruguay

The information provided here within should not be construed as formal guidance or advice. Please consult a professional for your specific situation. Information provided is for informative purposes only and may not capture all pertinent laws, standards, and best practices. The regulatory landscape is continually evolving; information mentioned may be outdated and/or could undergo changes. The interpretations presented are not official. Some sections are based on the interpretations or views of relevant authorities, but we cannot ensure that these perspectives will be supported in all professional settings.
Legal Team Uruguay
Legal Team Uruguay

Legal Team Uruguay is the Biz Latin Hub leading experts on doing business in Uruguay The Team writes on the news, doing business, law, and changing regulations. The team are experts in corporate law, Administrative law, Employment law, Immigration law and legal advisory services. Read more about them here. You can contact Legal Team Uruguay via our "contact us page".

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