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Ten Reasons to Invest in Uruguay

by | Mar 4, 2023

To invest in Uruguay is to invest in one of the most attractive countries in Latin America. One of its significant advantages for investors from other countries is that it allows companies to be 100% foreign-owned.

The last two decades have seen a strong interest on the part of the Uruguayan government in encouraging and promoting investment, both local and foreign. This posture has attracted (and continues to draw) many investors. Below are ten reasons why many believe that Uruguay is the best country in Latin America to set up a business.

Modern logistics

Uruguay has a modern infrastructure compared to many other countries in the region. However, the government has recently invested heavily in improving its infrastructure, particularly telecommunications, transportation, and renewable energy.

Regarding telecommunications, Uruguay has a highly developed mobile and internet network, with widespread access to 4G and broadband internet. The country has also invested in fiber optic networks to improve connectivity and increase broadband speeds.

Regarding transportation, Uruguay has a well-developed road network, with highways connecting major cities and towns. The country also has a modern international airport and several ports, including the Port of Montevideo, one of the region’s busiest ports.

Uruguay has also invested heavily in renewable energy, particularly wind and solar power. The country has set a target of generating 50% of its electricity from renewable sources by 2025 and has made significant progress toward this goal. Companies that invest in Uruguay have access to well-developed infrastructure.

Uruguay has experienced consistent economic growth over the past two decades, with a strong focus on trade, services, and agriculture. The country has a diverse economy with a relatively low level of inequality compared to many other countries in the region. The country has also maintained low levels of inflation and unemployment, which has helped foster economic stability for companies that choose to invest in Uruguay.

Economic, political, and social stability

Politically, Uruguay has a strong tradition of democracy and has held regular free and fair elections since the country transitioned to democracy in 1985. As a result, the country has a stable political environment, a multi-party system, and a relatively high consensus on many key issues.

Uruguay is considered one of South America’s most socially progressive countries, with a solid commitment to human rights and social welfare. The country has a high literacy rate and a robust public education system and has made significant progress in healthcare.

Ease of setting up a business

The Uruguayan government offers many benefits, so business people often choose this country instead of one of its neighbors. Some of these benefits are:

  • Free repatriation of benefits.
  • Equal treatment for foreign and local investors.
  • Free exchange market.
  • The tax system benefits the investor more than in most neighboring countries.

To register a business in Uruguay, you must submit various documents to the National Public Register of Commerce (Registro Nacional de Comercio), including proof of identity, a business plan, and information about the company’s shareholders and directors. You must also obtain a tax identification number (RUT) and register for social security and other taxes.

Uruguay offers a range of incentives for businesses, including a relatively low corporate tax rate and a simplified tax system. The country also has a free trade zone, where companies can benefit from tax breaks and other incentives.

In terms of doing business in Uruguay, the country has a well-developed infrastructure and a highly educated workforce, making it an attractive destination for companies looking to invest in the region. The country also has a stable political and economic environment, which can provide predictability and security for businesses.

Promotional programs for investment

The government grants many benefits to promote and encourage investment. Some of them are:

  • Free zones, in which there are no taxes.
  • The free transit of merchandise through ports and airports without the requirement of authorizations.
  • Promoted housing regime, with which investment in real estate is exempted from a large amount of taxes.
  • The Law for the Promotion of Entrepreneurship allows the creation of Simplified Limited Companies (SAS), enabling collective financing projects and others.

In addition to those recently named, there are many more measures and benefits; practically all business sectors are covered with good bonuses for investors.

Technology leader

Uruguay is one of the countries with Latin America’s most significant technological development. In addition, it is the nation with the fastest internet download speed in the region, which favors entrepreneurs for certain types of businesses that invest in Uruguay.

One area where Uruguay has been particularly successful is in the development of software and technology services. The country has a highly educated workforce with a strong focus on technology. As a result, it has attracted significant investment from multinational companies involved in these activities, looking to establish a presence in the region.

Access to a broad market

Uruguay has free access to the Mercosur market, which allows it to trade with more than 270 million people (56% of Latin America’s GDP).

In addition to Mercosur, it has a treaty with Mexico, so, between Mercosur and Mexico, Uruguay can trade free of tariffs with 400 million people.

Furthermore, Uruguay signed a free trade agreement with the European Union in 2019 and a similar deal with Chile in 2016.

High rates of return on real estate

The average net return rate of real estate in Uruguay varies between 4-5% per year, which means that the return in this country is far from the 2-3% per year obtained in its neighboring countries.

Uruguay has seen significant growth in its real estate market over the past decade, particularly in areas such as Punta del Este, Montevideo, and other coastal cities. This growth has been driven by a combination of factors, including a strong economy, political stability, and increasing international buyers that choose to invest in Uruguay.

One factor that can influence the rate of return on real estate investments in Uruguay is the country’s relatively low property taxes. This level of taxation helps to make investments in real estate more attractive. In addition, Uruguay’s real estate market has historically been less volatile than some other markets in the region, which can provide stability for investors.

Competitive national human resource talent

Due to the high quality of basic, technical, and university training, Uruguayans can easily adapt to new technologies or production processes, making any project very competitive.

Uruguay has a high literacy rate and a well-developed education system, including several universities and technical schools that provide training in various fields. In addition, the country has made significant investments in vocational training and skills development programs to prepare workers for the needs of the modern economy.

The availability of skilled labor can vary depending on the field or industry. However, Uruguay generally has a highly skilled software development, engineering, and professional services workforce. The country is also known for its strong agricultural sector, which relies on skilled workers with specialized knowledge and expertise.

Excellent quality of life

The Uruguayan capital, Montevideo, is a quiet city with access to education, security, good mobility, health, and public services.

According to the Mercer consultancy, it has the best quality of life in Latin America.

Uruguay also has a well-developed public healthcare system, providing its citizens with universal coverage. As a result, the country has a relatively high life expectancy and low infant mortality rate compared to other countries in the region.

In addition, Uruguay has a robust social welfare system, including programs to reduce poverty and inequality. The country’s relatively low Gini coefficient measures income inequality, indicating that wealth is relatively evenly distributed.

Uruguay is also known for its natural beauty, including its beaches, national parks, and other scenic areas. In addition, the country has a high level of environmental protection and sustainability, which can contribute to a high quality of life for its residents.

Lowest corruption rate in Latin America

Due to Uruguay’s international transparency, the UN confirmed that it has the lowest corruption rate in Latin America. This gives Uruguay a very high reliability, which benefits its economy, and is reflected in its high foreign investment rate.

Uruguay is often considered one of the least corrupt countries in South America. According to the Corruption Perceptions Index (CPI) 2021 published by Transparency International, Uruguay is ranked 23rd out of 180 countries worldwide, scoring 73 out of 100. This places Uruguay ahead of most other countries in South America.

While challenges and risks are always associated with any foray into a foreign market, those businesses that invest in Uruguay enjoy several compelling advantages when establishing a presence in this South American nation.

For more information related to investment in Uruguay, talk to the professionals at LATAM FDI.

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