Investments Uruguay advantages for 2023
Why do investors keep choosing Uruguay?
Chile and Uruguay are considered the top countries in the Americas in economic stability, yet Uruguay has defined itself as a more international destination. When visitors set foot in places like Punta Del Este in summer, they see hundreds of thousands of people coming from around the world in a permanent flow, who love the quality of life of Uruguay.
Foreigners feel safe and especially appreciate the peace, enjoyment with friends, the possibility of family life, and the quality of the beaches. But many do not just come for holidays but rather do a field research on investments in Uruguay.
Risks and Opportunities
A gradual slowdown of the world economy in 2023 and 2024 is expected and this external environment presents both risks and opportunities for Uruguay. As a small open economy Uruguay might be exposed to the risk of slower global growth. However, Uruguay has strong liquidity reserves in the private and public sectors that will help to adjust to external shocks.
Uruguay has gaining positioning as a strategic investment market presenting a favorable investment environment, with political and legal stability as well as alliances in the region. The control of financial variables, the fiscal discipline and increasing international integration has placed the Uruguayan economy in a good potential growth.
This favorable investment climate has expanded traditional and new sectors in Uruguay. The agricultural business has been one of the leading sectors to invest in, mainly for growing soybeans and other grains, with increasing exports to China and Russia.
Also the real estate sector with yet no presence of a housing bubble has attracted investors to buy properties with the aim of obtaining a good return rather than by expectations of appreciation of the good. The projects are still being developed without bank loans, demonstrating that there are investors willing to place their capital in this activity.
The introduction of financial inclusion in Uruguay on May 1, 2015 benefits investors by strengthening current and future investments and increasing confidence that will continue to position Uruguay in the global market.
New Regulations to Promote Investments in Uruguay
Attractive tax benefits, free return of capital and profits through a flexible financial system, coupled with a regime that does not discriminate between local and foreign investors have made investing in Uruguay an easier process.
Uruguay offers a comprehensive regulatory framework to promote investment which in recent years has been beneficial for productive investment with tax benefits for companies investing in research, development and innovation. As a result, this has created more jobs, increased exports and modernized communication networks and infrastructure.
Main Tools Offered by Uruguay to Promote Investment
- Law for the Promotion and Protection of Investments – Foreign investors have the same benefits as domestic investors and do not require prior authorization to settle in Uruguay.
- Investment projects are exempt from Income Tax of Economic Activities (IRAE) between 20% and 100% of the invested amount.
- Wealth tax fixed assets are also exempt and civil works and VAT on purchases of materials and services is recovered.
- Also, the law exempts import taxes and charges of movable fixed assets declared non- competitive to domestic industry.
- Projects that have to do with tourism can also obtain incentives on the infrastructure development such as road works, railway, port and airport access and energy infrastructure works.
- Access to a guarantee fund to facilitate obtaining bank loans.
Other Promotional Schemes for Investments
Uruguay has several schemes that generate an even more attractive scenario for investors. These schemes include the Law on Free Trade Zones, Free Ports and Airports, Industrial Parks, Temporary Admission and a new Economic Special Zone, which encourage the use of high quality tech activities and innovation.
In these areas, traders and manufacturers are exempted from tax, VAT and import duties. Goods can be re-exported without paying taxes, but those sold in Uruguay must pay import duties and VAT when leaving the area, unless, in the case of customs duties, the destination country has a Free Trade Agreement with Uruguay.