The Uruguayan political system has three major political parties which have taken turns in government and no major changes in general economic principles have occurred. Another special characteristic of the country is that there is strong respect for clarity and transparency in contract observance. This is regarded by investors as a distinguishing feature when it comes to choosing Uruguay as a mainstay for trust generation in business environment. According to the 2014 Corruption Perceptions Index prepared by Transparency International, Uruguay ranks 23st among 180 countries and is in 1st place in Latin America and Caribbean, as a reliable country.
Uruguay makes no distinction between the treatment of national and foreign capital, and incentives to investment promotion are available for both. There are no limits for foreign capital endowment in companies either. Foreign investors may carry out any type of activity under the same conditions as local investors. In certain sectors of activity foreign investors can perform activities under a public works concession regime by reason of State’s special regulations.
There are no limits to the transfer of income or capital repatriation and no previous permits are required. The exchange market is free, with no restrictions for the purchase or sale of foreign exchange and investments may be made in any currency. Uruguay has international standards applicable to intellectual property in place. Copyright, trademark and patent protection is legally provided for, with the country being regarded as having the second largest protection of intellectual property in South America according to The Global Competitiveness Report 2014-2015, World Economic Forum.
Uruguay offers free movement of capital, foreign currency and gold from and to other countries and a free convertibility exchange system for national currency. It is important to highlight that MERCOSUR offers to existing companies and those starting operations in Uruguay access to a market of 276 million people, with a GDP of USD 3.3 billions, i.e. fifth world economy. Uruguay is located in a privileged area within MERCOSUR since it is in the center of the most populated area with the highest income level. Within a radius of 1,500 km from Uruguay, 90 million inhabitants are concentrated in large industrial and agricultural development areas.
Foreign investors may operate in the country by organizing a Corporation (S.A.) – corporate type most frequently used, and they can even hold 100% of their share capital. They can also operate through the organization of a Limited Liability Company (S.R.L.) or other types of personal companies made up of partners who may be national or foreign, natural or legal persons 1. Foreign investors may also choose to operate in the country through a foreign company branch. Tax treatment of the different corporate vehicles differs in several aspects, whereby it is convenient to have anticipated planning for the purposes of choosing the corporate type to be adopted. Uruguay has traditionally provided a security framework to foreign investors due to the effective law enforcement and economic stability. Besides, it is member of international organizations which foster investment security, such as the Multilateral Investment Guarantee Agency (MIGA) and the International Center for Settlement of Investment Disputes, headquartered in the World Bank. Moreover, Uruguay has concluded agreements for the promotion and reciprocal protection of capital investments with several countries.
Foreign investors can set up their business in Uruguay without prerequisites, special State permits, or the need for a local partner. Also, no discrimination exists in the country on foreign capital treatment, so you can access all benefits and incentives to promote investment intended for domestic firms. In turn, the financial market is completely free, allowing the free sale and purchase of foreign currency, and the inflow or outflow of foreign exchange, capital, profits, dividends and interest without restrictions or need for authorization. There is only one tax system for the entire country.