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Doing business in Uruguay: 9 Reasons to Invest

by | Apr 6, 2024

Uruguay enjoys strong political and social stability and a consolidated democracy.

Foreign investors enjoy the same incentives as local investors when doing business in Uruguay. They are protected by a Law of National Interest that, from a tax point of view,  puts foreign and domestic companies on equal terms.

Political, legal, and social stability

Uruguay has enjoyed strong political and social stability for years, backed by a consolidated democracy and strong legal security. Currently, the political system has three majority parties alternating in government, always maintaining a strong respect for the country’s rules of the game and the essential foundations of economic activity.

Macroeconomic solidity

In recent years, the Uruguayan economy has achieved the most extended period of growth in history. This expansion was accompanied by an increase in Uruguay’s GDP per capita, from USD 10,000 in 2005 to over US$ 22,000 in 2024. This has allowed Uruguay to position itself as the economy with Latin America’s highest GDP per capita (measured in current US$). Doing business in Uruguay is facilitated by the fact that the country has a high Investor Grade that has been ratified by the leading credit rating agencies: Moody’s, Standard Poors, Fitch Ratings, and DBRS.

Access to an expanded market

Uruguay is the gateway to Mercosur. Free access to Mercosur allows companies doing business in Uruguay to access a market with more than 284 million people, with a combined estimated GDP of US $2.64 trillion. Combining Mercosur and the country’s FTA with Mexico, Uruguay has tariff-free access to a market of 400 million people, accumulating 76% of Latin America’s GDP and representing a foreign trade flow of almost 80% of the total from Latin America. Mercosur also has free trade agreements with Egypt, the EU, Israel, Japan, and Singapore.

Benefits for the investor

Foreign Direct Investment (FDI) received by Uruguay reached US$ 9.3 billion in 2022. One of the distinctive features of the country’s growth in recent years is the dynamism of investment. FDI in Uruguay has reached record levels, which has allowed it to position itself among the first recipients in South America in recent years. Uruguay is not only a large recipient of FDI but is also the leading country in reinvesting profits in Latin America. 65% of the total earnings from FDI are reinvested in Uruguay. This reinvestment percentage reflects the confidence of investors in doing business in Uruguay. Investors enjoy profitability and a good business climate.

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Ease of doing business in Uruguay

The country guarantees equal treatment for investors and operations free of restrictions for business activity, both in terms of capital mobility and dividends. This includes the purchase and sale of foreign currency. The country is continually working to achieve an adequate business climate and the greatest facility for the investor. In this sense, Uruguay has promoted a series of reforms that imply a significant improvement in the efficiency and agility of state processes, such as same-day business openings, invoicing, and electronic signature or single window for foreign trade, among others.

Modern logistics

Uruguay has a first-class port infrastructure in Montevideo, from where the densest road network on the entire continent is projected. Those doing business in Uruguay also benefit from excellent connectivity with neighboring countries. There is also a modern airport, designated as one of the best in the world. In both the country’s ports and airports, investors can operate under the free port/airport regime, allowing them to carry out logistical operations. This includes adding value to the merchandise and re-exporting without accompanying taxation. At the forefront of technology, Uruguay leads the ICT Development Index in Latin America, prepared by the International Telecommunications Union (ITU). This fact is also reflected in the degree of Internet penetration and mobile phone users, where Uruguay country occupies a prominent position in the region. At the same time, companies doing business in Uruguay benefit from the highest download speed in the area, thanks to its modern infrastructure.

Competitive national talent

Human resources in Uruguay are highly competitive, thanks to the combination of several factors: the high quality of basic, technical, and university training and the flexibility and ease of Uruguayan workers in adapting to new production processes or technologies. The Uruguayan workforce has been showing a continuous increase in its ability to master other languages, particularly English.

Efficient energy policy

Uruguay has “Uruguay Natural” as its country brand, which implies that its positioning strategy consists of showing buyers of its products that items made in Uruguay are produced in the most environmentally friendly way possible. This reflects the country’s great responsibility regarding environmental problems and constitutes added value for many consumers and organizations doing business in Uruguay.

Excellent quality of life

Metropolitan Montevideo is an area of 1.78 million inhabitants that, like Punta del Este, offers outstanding living conditions for executives doing business in Uruguay and their families with access to first-class health and education services. More and more foreigners from the northern hemisphere are choosing Uruguay as their residence. The country is recognized as having an exceptional quality of life due to its social safety nets, political stability, and high life expectancy. In recent years, Montevideo, the capital of Uruguay, has been ranked the city with the best quality of life in Latin America.

In conclusion, Uruguay stands out as a prime destination for foreign investment with its stable political and social environment, equal treatment for local and foreign investors, and robust economic indicators. With a thriving economy boasting the highest GDP per capita in Latin America and access to vast markets through Mercosur and other free trade agreements, Uruguay offers ample opportunities for business growth and expansion. The country’s modern infrastructure, competitive workforce, efficient energy policies, and excellent quality of life further enhance its appeal to investors. As Uruguay continues to prioritize reforms to improve the ease of doing business, it solidifies its position as a premier investment destination in the region, promising prosperity and success for those who choose to invest in its dynamic economy.

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