Uruguay is considered the gateway to Latin America. Besides having a population of 3.4 million, it has access to the Latin American market of over 400 million people. For this reason, several multinationals choose Uruguay as a regional hub to expand their business operations too.
There are various factors that attract foreign investors to do business in this country and choose Uruguay as an expansion destination.
Uruguay stands out in Latin America for being a society with high per capita income and a low level of inequality and poverty (with an almost complete absence of extreme poverty); this has resulted in an expansion of the nations middle class. In fact, in relative terms, the middle class is the largest in Latin America and represents approx. 60% of its population. As a result, in 2013, the World Bank placed Uruguay as a high-income country.
Likewise, Uruguay is on track to complete its 15th year of uninterrupted economic growth. GDP per capita equals US$17,250, which is far above the average in South America. As a matter of fact, Uruguay is recognized to be ranked at the top in Latin America.
- 1st: Democracy Index (The EIU 2017)
- 1st: Rule of Law (World Justice Project 2017-2018)
- 1st: Corruption Perception Index (Transparency International 2018)
- 2nd: Economic Freedom Index (Heritage Foundation 2018)
- 1st: Prosperity Index (Legatum Institute 2018)
- 2nd: Global Peace Index (Institute for Economics & Peace 2018)
Preferential Market Access
In addition to Uruguay’s privileged geographical location, it has entered into thirteen regional trade agreements. These agreements cover goods, services, investments, among others. International agreements play a key role in attracting foreign investors to Uruguay.
Since 1991, Uruguay has been part of the Southern Common Market (MERCOSUR). In addition, it has service trade agreements and public procurement agreements, investment protection and promotion agreements with 30 countries.
Additionally, Uruguay benefits from the scheme of the Generalized System of Preferences (GSP), whereby developed countries grant non-reciprocal preferences to developing countries. For instance, the United States grants 100% preference to Uruguay within the framework of the GSP for approximately 30% of the tariff lines.
Last but not least, since 2018, Uruguay has been part of the D9, an association of the most advanced developing and digitally governed states, together with countries such as Canada, South Korea, Estonia and Israel.
Straightforward Company Incorporation Process
Before investing in Uruguay, one should have the know-how of the business registration process. Initially, to be able to register a company in Uruguay, you should have all the required documentation. Find below the key steps involved in the company incorporation process:
- Find a legal representative to execute the company registration.
- Select and reserve the company name at the One-Stop Shop online portal of the National Audit Office.
- Notarize company’s bylaws and signatures. The public notary will deliver an official certificate from the National Registry of Commerce.
- The company will need to register with the national tax authority and then obtain the companies tax identification (“RUT”).
- Open a bank account and deposit the initial capital.
- Begin your commercial operations.
Investment Promotional Schemes
Uruguay has established several investment incentives and schemes, applicable to different types of commercial activities within the national territory.
- Attractive Legal Framework: in Uruguay, domestic and foreign investors are treated equally. Furthermore, no prior authorization or registration is required and there are no capital controls that restrict the repatriation of profits. Also, specific investment projects are exempted from taxes up to 100% of the invested amount.
- Ports and Airports: This regime makes Uruguay a logistic hub in Mercosur and a distribution centre for goods in transit. Montevideo is the first terminal of the Atlantic coast in South America. It states that goods may circulate freely without the need for permits or formal procedures, as long as everything is in line with the Administración Nacional de Puertos (ANP) requirements.
- Tax Refund and Temporary admission: In regards to Value Added Tax (VAT), exports are exempt and allow exporters to have VAT included in their purchase invoices refunded, thus avoiding the incidence of said tax on the exportable product. Additionally, the temporary admission regime allows certain foreign goods to enter into the market and free of taxes.
Plentiful Market Opportunities
The global mission of Uruguay includes the promotion of several appealing national sectors where foreign investors can engage the local market.
- Agro-Industry: This sector is flourishing, with steady growth in the volume of agricultural production. The major agricultural products include soybeans, sorghum, citrus fruits, rice, and maize.
- Forestry Sector: In 2018, forest exports accounted for 24% of the country’s total exports of goods. From this, the pulp is the main exported product. Uruguay’s geographical location, the large supply of raw material together with a favourable legal framework make this sector attractive.
- Renewable Energy: In less than 10 years, Uruguay has slashed its carbon emissions and electricity costs. In fact, renewables provide approximately 95% of the country’s electricity. As a result, energy investment and liquid gas are currently booming.
- Automotive Sector: Uruguay has extensive experiences in vehicle assembly and auto parts manufacturing. Of the total exports in this sector, almost 90% corresponds to the auto parts sector, the remaining to the sale of vehicles.
Do You Need Local Support?
Strong national sectors, a stable economy and a government welcome of foreign shape a positive and profitable future for investment in Uruguay.
Biz Latin Hub provides a wide range of reliable market-entry and back-office services and stands out as the perfect local partner to support your business in Uruguay. If you require personalized information, please reach out to our team at [email protected] and see how we can facilitate your business expansion to Uruguay.