Uruguay’s Free Trade Zones: a tool to boost investment
Article 4 minute read

Uruguay’s Free Trade Zones: a tool to boost investment

14 September 2017

When thinking about a new destination to operate, companies continue to choose areas such as Free Trade Zones, which have a high growth potential.

Uruguay is considered to be an attractive investment destination in rankings developed by global institutions - mainly for its broad economic and financial freedom, political, legal and social stability, macroeconomic strength, and the transparency provided by an open government and universal access to information. On the other hand, Uruguay is the gateway to Mercosur (Common Market of the South, in English), allowing access to a market of more than 270 million people; positioning itself as a regional logistics hub.

In 2015, the Global Benchmark Complexity Index conducted by TMF Group ranked Uruguay as the easiest jurisdiction to do business in Latin America; in 2017, the Financial Complexity Index, also developed by TMF Group, ranked the country as one of the least complex countries in the Latin American region in terms of accounting and tax compliance. Based on this, it can be said that Uruguay is a clear example of how counting on a sustained policy that does not undergo abrupt changes creates a favorable environment for investors, and generates confidence in the business scenario.

This attractiveness the country presents for companies that seek to expand or want to invest across international borders, is why Uruguay always aims at business development policies that generate employment and promote investment.

Among the main incentive regimes available are those provided by the Free Trade Zones - business areas that drive investment, exports, employment and international economic integration and provide an ideal framework for setting up distribution centers, for example, to supply merchandise to the cities of the region.

Main characteristics of a Free Trade Zone

The Free Trade Zones are delimited areas of the national territory, either public or private property, whose purpose is the development of industrial, commercial or services activities, through a tax exemption structure. It is also important to note that Free Zones have legal status recognition since their legal framework is governed by Law No. 15.921.

Currently, there are 12 Free Trade Zones concentrated in the south-west zone of Uruguay, in the areas of Montevideo, Canelones, Florida, San Jose, Colonia and Rio Negro.

The country’s first Free Trade Zones were developed as logistics hubs, but as years passed, other Free Zones emerged and began to provide services abroad and to Uruguay - as in the case of outsourced administrative activities, call centers and software development, among others. Currently, a wide variety of activities are developed in these areas, and there is a high growth potential.

According to their characteristics, the Free Trade Zones can be classified into four types:

  • Industrial;
  • Commercial and logistics; 
  • Global Services; and
  • Mixed.

The main benefits of the Free Trade Zones Law are:

  • Tax exemption;
  • Legal certainty;
  • Free entry and exit of goods and services;
  • Free circulation of foreign exchange;
  • Competitive costs of telecommunications and other services at an international level, etc.

Free Trade Zones represent an excellent option for companies looking to set up or expand their businesses in Uruguay, since they are key for the country's business development policies, generating employment and promoting investment.

If you want to know more about the benefits and business opportunities offered by the Free Trade Zones, contact our experts in Uruguay for more information.

Written by

Mónica Alonso

Former Accounting Manager, Uruguay

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