In an interview with El País, Fredson Justo and Pablo González from TMF Group talk about fiscal transparency in Uruguay.
WHAT INVESTORS VALUE
"There are no sudden shifts in Uruguay"
Security over the rules is key to attract investors, experts from TMF Group state.
By: Mathías Da Silva
González Coló and Justo evaluated the country situation. Photo: F. Flores
International companies that invest in Uruguay appreciate the security in the rules since there are no "big shifts". It also praises that the country is a step "ahead" regarding the changes in fiscal transparency. This was pointed out to El País by Pablo González Coló (Director at TMF offices in Uruguay and Paraguay) and Fredson Justo (Subregional director for South America).
How is Uruguay seen abroad and how attractive is it for investors?
FJ: Currently, Uruguay has a very comfortable and stable situation. It is a country that is very attractive because it has, for example, free zones that help companies get here with some benefits. We have companies from countries in Europe, the United States and other Latin American countries that bring services to Uruguay; it is a very interesting point because Uruguay is starting to be a country that has access to new businesses. Even the three free zones (in Montevideo) are practically full, there is no space and we need more. It is a very good thing that is happening because Uruguay has to make more investment to have more possibilities of receiving. There is a very interesting competitive advantage, Uruguay has not only tax benefits but also people with skills, people who speak languages. The quality that Uruguay offers is interesting not only for the benefits, sometimes there are benefits in other countries but there are no skillful professionals who know languages and it becomes more difficult.
PGC: Being a country as small as Uruguay, to be able to sell services abroad we cannot do it in volume, it must be in quality.
Do you see Uruguay's potential on the services side or on the industrial side?
PGC: No. We have both potentials. Regarding infrastructure, the infrastructure available is easier to provide services, there is qualified people providing services and good communications. On that side, the infrastructure is good although you have to invest a little more. What is now in vogue is the discussion of infrastructure related to logistics, routes, especially in the case of UPM. It is important the lack or the need to modernize this infrastructure and as long as we can cover those needs we are going to receive more investments. Although we are a country open to investments, this is a limitation. We should continue to give importance to the positive things we have. In international indicators, we are very well positioned in democracy, business facility, transparency law. Those things have to be maintained, others have to be improved, but those that are good have to be maintained.
Is the current scheme of investment promotion with tax benefits attractive?
PGC: I think it is an attractive situation. We know that there are other countries that have attractive regimes like Paraguay that has a very attractive tax structure. However the investor does not just analyze the tax situation. It is an element, but there are others such as security, not only if it is a safe country but also about the norms. Uruguay is a country that despite the changes at the government level, the rules do not have big swings, investors can trust that what is defined is going to be fulfilled and that gives you a certainty of what your future projection will be. We must be careful not to change those rules, when you can modify any part of the tax law that complies with what was established in international agreements with companies that come to the country.
Is Paraguay the competition in attracting investments?
PGC: I do not think it is competition, actually a country competes with all countries when investors analyze the different options. I have not seen in the cases that we have that both Uruguay and Paraguay were analyzed and then it is decided to go to Paraguay for some reason of preference over Uruguay. They do have interesting regimes that are suddenly more beneficial, but Uruguay has other characteristics that maintain the level of investment. There were comments about Uruguayan businessmen that go to Paraguay and stop doing business here. Our experience is of expansion to other countries and not of reduction. Paraguay is an additional opportunity to what Uruguay is already putting together.
FJ: There is one very important thing, Uruguay is always ahead of all the changes, there is a standardization of global financial accounting reports and Uruguay, as Chile, Argentina and Brazil are the countries that are in charge of accompanying these global changes. In Paraguay we do not have those changes of legislation so it is more backward than the others. When we talk about security, companies that want to make an investment and expand around the world will do an analysis and this will be very important to make the decision.
How do you see the relationship between the government and private parties?
PGC: We measure that partly with the Complexity Index and Uruguay is well positioned in the region. We are a country with its bureaucracy and its reporting of information that must be fulfilled, but on the other hand it is also a serious country where this type of procedures must be completed. On the business side, I think that it works well with the Chambers of Commerce. Uruguay is always going slowly but surely. You have to have a more aggressive activity or more marketing investment.
Does fiscal transparency change the tax map for international companies based in Uruguay?
FJ: We can have some people who had money invested here, for example Argentines who had money and are returning. You can lose this but that does not move the country. These people are only saving their money, we are focused on the companies and for the companies, this law just helps because companies know with certainty that Uruguay is a serious country, that can be trusted, that is following the global norms, so this only helps to bring in more companies.
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