Biz Latin Hub had the privilege of speaking with Ambassador Ana Teresa Ayala Barrios, General Director for International Economic Affairs and the Uruguayan Ministry of Foreign Affairs in Montevideo. In a two-part series, Ana speaks with us about her vision for the Australia-Uruguay relationship, and the conditions for doing business in Uruguay.
Australia and Uruguay have held a longstanding bilateral relationship. How would you describe the nature of Australia-Uruguay relations?
As I see it, it is absolutely clear that Uruguay and Australia have a mutually beneficial relationship. Within this positive bilateral framework, we should continue working in the future to improve and develop the economic benefits for both countries.
There is a great untapped potential that can benefit bilateral trade based on the complementarities that currently exist between our countries. Currently, the trade is focused on products such as seeds and fruits for sowing, fertilizers, plastic plates, articles and instruments, and appliances for medical, dental or veterinary use.
How has this relationship evolved over time?
Since a long time ago, Uruguay and Australia have been working together with the goal of reaching a more profound relationship. These shared efforts have shown success. As an example, we may point out that in 2001 Uruguay and Australia signed the “Investments Promotion and Protection Agreement”, which has been recently updated, in order to achieve a more attractive and safe legal framework for entrepreneurs and investors of both countries.
There are also other bilateral agreements in force, such as a Memorandum of Understanding on Strengthening Trade and Bilateral Investment (2010) and the Agreement on Exchange of Information in Tax Matters (2014) which, in addition to directly benefiting bilateral trade and investment, serve as a basis to contribute to a robust legal framework that regulates our economic relations.
How do you see future trade cooperation progressing between Australia and Uruguay to support mutual growth?
From where I stand, I realize that we must continue working on the wide range of positive possibilities that our bilateral relationship offers for both countries. Consequently, from Uruguay’s Embassy in Canberra, we should keep opening new spaces of interaction between public and private actors.
Specifically, it would be positive to work on deepening cooperation in areas in which both countries maintain similar standings. Energy and exploitation of mineral resources are an example. Besides, we can work on exploring the possibility of investment through associations of Uruguayan and Australian companies in agricultural-livestock and services sectors, taking advantage of the opportunities offered by bilateral trade, preferential access to different markets, a common productive base and similar quality standards.
What similarities and differences do you see between the two countries?
I would like to focus on similarities, which gather us. Therefore, in my opinion, we can find our main similarity if we talk about values: Uruguay and Australia share plenty of values with international projection. For instance, we naturally share the strong defense of human rights and the defense of institutions, to name a couple.
How many Australian businesses are operating in Uruguay?
There are currently six Australian businesses that operating in Uruguay:
- Untapped fines wines
- Abby Uruguay (Fabrication of cement, concrete and gypsum products)
- Parque Industrial Las Piedras (Logistic and industrial activities)
- WAGYU Uruguay (Beef commerce)
- IFCO Uruguay S.A. (Storage of products)
- NUFARM Uruguay S.A. (Fertilisers commerce)
What do Australian businesses need to take into account when expanding to Uruguay?
Uruguayan business regulations offer several different types of business structures, with the upcoming possibility of implementing a new legal entity for foreigners: establishing a foreign branch office. For most, the most suitable business types are Limited Liability Companies (LLCs) and Corporations.
Some of the other entities available to businesses – and their Spanish names – are:
- labor and capital partnerships (sociedades de capital e industria)
- limited partnerships (sociedades en comandita)
- general partnerships (sociedades colectivas)
- de facto partnerships (sociedades de hecho).
It’s easy to set up these businesses. Corporations, limited liability companies and companies with one shareholder or director can be applied for in one simple step. This is done through Uruguay’s ‘Company in a Day’ program (“Empresa en el Día”), aimed at enabling new businesses to get started as soon as possible, saving them money and time.
Of course, the Uruguayan tax system will be different, and businesses will need to be aware of this. The tax system comprises direct and indirect taxes. Indirect taxes are the main source of collection for Uruguay, and they’re based on the source principle.
The main taxes Uruguay applies to business activities are the Value Added Tax or VAT, the Wealth Tax and the Corporate Income Tax.
Be aware of our Free Zones legal regime and what they offer for businesses who operate within their borders; Free Zone operators are not subject to taxation, since they are beneficiaries of a significant tax exemption
In Uruguay there is no discrimination in the treatment of domestic and foreign capital, and we provide incentives to both sides promote local and foreign investment and business growth equally. There are also no restrictions on the allocation of foreign capital in companies.
What key aspects of Uruguay regulations do Australian businesses need to be aware of?
No prior requirements or permits are required for a foreign investor to operate in Uruguay, with the possibility of operating through any business type, including branches of foreign legal entities. Partners do not need to have Uruguayan nationality or residence in any of the chosen types. They only need to have a legal address in Uruguay.
What challenges do Australian businesses typically face in Uruguay?
Given the fact that we don´t have any complaint from Australian businesses operating in Uruguay, I wouldn’t say that they face challenges in Uruguay.
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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.