TerraLex Cross-Border Guide to Cross-Border Guide to Business Investment in Latin America & the Caribbean - NEW

Foreign investors may conduct business in Uruguay through several types of legal vehicles. The most commonly used entities are Sociedades Anónimas (corporations), Sociedades de Responsabilidad Limitada (limited liability companies), and Sociedades por Acciones Simplificadas (simplified stock companies). All of these forms provide limited liability to their owners.

Under the Uruguayan Commercial Companies Law (Law No. 16,060), corporations (Sociedades Anónimas) are characterized by capital divided into shares and by the limitation of shareholders’ liability to the amount of their subscribed shares. Corporations may issue registered or bearer shares, although registered shares are now the prevailing structure in practice. Corporations have no general restrictions on their business activities and are commonly used for large-scale commercial or industrial operations. Shareholders and directors may be individuals or legal entities of any nationality or residence.

Limited liability companies (Sociedades de Responsabilidad Limitada) are also governed by Law No. 16,060 and are typically used by small and medium-sized businesses. Partners’ liability is strictly limited to their capital contributions, and they bear no personal liability for the company’s obligations. Ownership interests are represented by non-negotiable participation units (quotas), which must be of equal value and are indivisible. LLCs may have between two and fifty partners, with no nationality restrictions.

Simplified stock companies (Sociedades por Acciones Simplificadas - SAS) are a more flexible corporate form that combines features of corporations and limited liability companies. A SAS may be incorporated by one or more individuals or legal entities (other than corporations), and its capital is represented by shares.

Shareholders’ liability is limited to their respective contributions. Certain entities, such as publicly traded companies, companies with state participation, or entities required by law to adopt a specific corporate form may not use this structure.

Foreign investors may also operate in Uruguay through a branch of a foreign company. Branches are regulated by Articles 192 to 198 of Law No. 16,060 and are governed, as to their existence and capacity, by the law of their place of incorporation. While branches may conduct business in Uruguay without operational restrictions, they must engage in the same activities as their head office. The foreign parent company remains fully liable for the branch’s obligations, and the branch must keep separate accounting records in Uruguay, in Spanish and in local currency.

In addition, trusts (fideicomisos) are available under Uruguayan law and are frequently used for specific or structured transactions, particularly in sectors such as infrastructure, real estate, manufacturing, and services. Trusts offer a flexible alternative to traditional corporate structures and are often used by foreign investors for investment structuring or to provide guarantees.

The appropriate choice of legal entity depends on several factors, including the number of investors, the nature and scale of the business, liability considerations, tax planning, governance needs, and ongoing compliance and record-keeping requirements.

The principal statutes are Law No. 16,060 (Commercial Companies Law), Law No. 16,906 (Investment Promotion and Protection Law), and the Uruguayan Code of Commerce, together with other sector-specific and entity-specific regulations (e.g., the regime governing SAS).

The incorporation of a Sociedad de Responsabilidad Limitada (SRL) or a Sociedad por Acciones Simplificada (SAS) generally involves selecting and reserving a company name, making the required capital contributions, agreeing on and executing the terms of the articles of association/bylaws, filing the incorporation documents with the Registry of Companies (Registro Nacional de Comercio), and publishing an extract. The overall timeline varies depending on the corporate vehicle and the completeness of the filings; in practice, it may range from a few weeks to a couple of months.

The incorporation of a Sociedad Anónima (SA) is more complex and time-consuming, as it requires an additional review by the Auditoría Interna de la Nación, a governmental body with corporate oversight responsibilities. As a result, many investors opt to acquire shelf companies, which may significantly reduce incorporation time and administrative complexity.

In the case of a branch of a foreign company, the foreign entity must appoint a local branch administrator, assign capital to the branch, and file the relevant documentation with the Registry of Companies, including evidence of the company’s existence and organization in its country of origin.

Uruguayan law does not generally require a minimum share capital amount in absolute terms, but it does impose minimum subscription and paid-in (integration) percentages depending on the corporate form. For Sociedades Anónimas (SA), the capital must be expressed in local currency, founders must subscribe at least 50% of the capital and pay in at least 25% at the time of incorporation. For Sociedades de Responsabilidad Limitada (SRL), at least 50% of cash contributions must be paid in at incorporation (and 100% of in-kind contributions). For Sociedades por Acciones Simplificadas (SAS), at least 10% of cash contributions must be paid in at incorporation (and 100% of in-kind contributions).

There are no exchange control restrictions in Uruguay. As a general principle, Uruguay applies a territorial (source-based) tax system and does not tax most foreign-source income, subject to specific source rules and anti-avoidance provisions.

Under Section 5 of Law No. 16,906 (Investments Law), Uruguayan law allows and guarantees the free transfer of capital, profits and dividends. Transactions can be entered into in any currency and no permits or authorizations are required to bring money into the country or for the remittance of funds abroad.

There is no general requirement for directors of Sociedades Anónimas to be Uruguayan nationals. Management may be entrusted either to a sole director or to a board of directors, except in the case of public corporations, where a board is mandatory. Directors can be individuals or legal entities.

However, it must be noted that the Tax Administration requires that the representative of branches of foreign companies are local residents.

Companies that are Free Zone users must comply with a minimum local workforce requirement to maintain Free Zone status and benefits. As a general rule, at least 75% of employees on payroll must be Uruguayan nationals/citizens; for services activities, the minimum is 50%. In exceptional cases, the Executive Power may authorize lower percentages.

Since 2017, companies are required to report their ultimate beneficial owners and the holders of equity interests (together with the full ownership/control chain) to the Central Bank of Uruguay. Compliance is supervised by the Auditoría Interna de la Nación (AIN), and non-compliance may lead to fines and other restrictions.

Additionally, entities must maintain adequate records and supporting documentation to identify their shareholders and ultimate beneficial owners. Such documentation must allow the ownership chain and the identity of the ultimate beneficiary to be clearly traced. Entities are also required to establish and document procedures to identify their ultimate beneficial owners, both at the time of initial reporting and upon any subsequent changes.

In carrying out its supervisory role, the AIN has recently increased inspections, requiring entities to appear through duly authorized representatives. Based on current practice, the AIN typically requests the attendance of a representative accredited by notarial certification, together with specific documentation indicated in each notice.

Depending on the entity type and size, annual financial statements must be prepared and, in many cases, registered with the Auditoría Interna de la Nación (AIN) through its Central de Balances Electrónica. In broad terms, commercial companies (including SAs, SRLs and SAS), branches/permanent establishments and certain other entities that exceed statutory thresholds (expressed in indexed units and typically based on annual revenue) must file their annual financial statements within 180 days after the end of their financial year. Where applicable, the filing must include the relevant accountant’s report, and larger entities may be required to submit audited financial statements.

Entities supervised by the Central Bank of Uruguay (e.g., financial institutions, insurers, pension fund administrators and securities intermediaries/issuers) are generally subject to separate reporting, audit and disclosure obligations under their sector-specific regulations.

As a matter of corporate governance, corporations typically hold an annual ordinary shareholders’ meeting to consider the financial statements, decide on profit allocation and appoint or renew authorities, subject to statutory deadlines and formalities.

Labour relations in Uruguay are governed by detailed statutory legislation and are supervised by the Ministry of Labour and Social Security (MTSS). The legal framework is traditionally employee-protective and applies equally to domestic and foreign employers.

Key labour regulations include:

Working hours

The working day is limited to 8 hours per day. Weekly limits are 44 hours for commercial activities and 48 hours for industrial activities. Employers may adjust opening and closing hours within legal limits, and commercial establishments may operate on Saturdays and Sundays. Overtime applies when legal or collectively agreed limits are exceeded.

Wages

Salaries are agreed individually with employees or, in some cases, set through collective bargaining agreements. In no case may remuneration be lower than the national minimum wage established by the Executive Branch.

Collective bargaining and unions

Uruguay operates a mandatory sector-based collective bargaining system, involving unions, employers and the government. Collective agreements regulate wages and working conditions and may establish terms more favorable than statutory minimums. Union membership is voluntary.

Paid leave and statutory benefits

Employees are entitled to:

• Paid annual leave of 20 consecutive days, increased by one additional day for every four years of service;

• Vacation salary, consisting of an additional payment for better enjoyment of annual leave;

• Thirteenth Mandatory Salary (13th salary), equivalent to one twelfth of total annual remuneration, paid half in June and half in December; and

• Weekly rest and paid public holidays

Termination and severance

Employers may terminate employment relationships subject to mandatory severance compensation. For monthly employees, severance is generally equivalent to one monthly salary per year of service, capped at six monthly salaries. For daily workers, severance is calculated on a comparable basis, taking actual working hours into account.

Foreign workers

Foreign nationals working in Uruguay for more than six months may obtain temporary (up to two years) or permanent residence, generally subject to proof of absence of criminal records and standard documentation.

Certain activities impose nationality requirements, including:

• Fishing: captain and at least 50% of the crew must be Uruguayan;

• Uruguayan airlines: crew must be Uruguayan and at least 75% of employees must be Uruguayan citizens;

• Free zones: at least 75% of employees must be Uruguayan citizens.

Social security and occupational risks

Social security coverage is compulsory and includes disability, retirement, illness, work-related accidents, maternity, unemployment and death. Contributions are collected and administered by the Banco de Previsión Social (BPS). Work-related accidents and occupational diseases are covered under a mandatory state insurance system. Certain foreign workers, including some working in Free Zones, may be excluded from the system under specific legal provisions or international treaties.

In order to work in Uruguay, foreign nationals must obtain legal residency. Residency is granted upon meeting requirements which generally include:

• Proof of good conduct in the country of previous residence.

• A certificate of good health.

• Proof of means of subsistence.

Law No. 19,254 simplified the procedure for obtaining permanent residency for nationals of Mercosur member and associate countries, as well as for certain family members of Uruguayan nationals (including cohabitants, parents, siblings, and grandchildren).

Uruguay generally allows foreign investors to freely acquire and own land.

However, Law No. 19,283 establishes a specific exception: Uruguayan companies with bearer shares may not own rural real estate if their controlling shareholders are foreign States or sovereign wealth funds. Exceptionally, the Executive Branch may authorize such ownership if the company submits a productive investment project and the participation of the foreign State or sovereign fund is minor and non-controlling.

Apart from this limited restriction, there are no general legal impediments based on nationality or foreign investor status affecting the ownership of land in Uruguay.

Uruguay has signed multiple treaties for the promotion and protection of investments with, among others (non-exhaustive list; treaty status should be confirmed case by case):

• Europe: Armenia, Belgium, Czech Republic, Finland, France, Germany, Hungary, Italy, Luxembourg, Poland, Portugal, Romania, Spain, Sweden, Switzerland, the Netherlands, the United Kingdom.

• Asia and Australia: Australia, China, Israel, Malaysia, South Korea, Vietnam, United Arab Emirates, Japan.

• North America: Canada, United States, Mexico.

• Central America: El Salvador, Panama.

• South America: Chile, Venezuela and MERCOSUR (in force for Argentina, Brazil, and Uruguay).

On the other hand, Uruguay has entered into an extensive network of Double Taxation Treaties (DTTs), generally following the OECD and UN Models. These treaties aim to prevent double taxation and foster cross-border investment.

Treaty partners include, among others: Germany, Spain, Mexico, Switzerland, Portugal, the United Kingdom, Luxembourg, Italy, Japan, South Korea, Singapore, Chile, Ecuador and the United Arab Emirates.

In addition, Uruguay has executed multiple Tax Information Exchange Agreements (TIEAs) with countries including France, Argentina, Canada, Australia, the Netherlands, the United Kingdom, and South Africa.

Uruguay is also a signatory to the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). The MLI entered into force for Uruguay on June 1, 2020, and modifies covered tax treaties in accordance with the BEPS minimum standards, without requiring bilateral renegotiation.

Uruguay has a dedicated legal framework aimed at the promotion and protection of investments, with the principal incentives implemented through:

1. Investment Law regime (automatic and project-based incentives)
2. Free Zones Law
3. Industrial Parks and Scientific-Technological Parks
4. Specific incentives for the Information Technology (IT) and software sector

Investment Promotion Regime

Under the Investment Law, companies engaged in productive activities may access automatic tax incentives, including exemptions from Net Wealth Tax on certain productive assets, as well as VAT and Excise Tax (IMESI) relief on qualifying imports and reimbursement of VAT on qualifying local purchases.

Additional and more significant benefits may be granted to COMAP-approved investment projects, including partial or full corporate income tax (IRAE) exemptions, Net Wealth Tax exemptions for movable fixed assets and construction works, VAT refunds, and customs duty exemptions. These incentives are granted for defined periods and are not dependent on the legal form of the investor or the source of funding, subject to ongoing compliance and reporting obligations.

Free Zones

Uruguay’s Free Zones regime allows authorized industrial, commercial, logistics, and service activities to be carried out under a comprehensive tax-exempt framework. Free Zone users are exempt from all national taxes on activities performed within the zone, and the State guarantees these benefits for the duration of their contract. Movements of goods to and from Free Zones generally enjoy tax-free treatment.

Industrial and Scientific-Technological Parks

These regimes promote industrial and innovation-based activities within designated areas delimited by the Executive Power, with the purpose of establishing and operating productive industrial facilities, as well as service, training, research, and innovation activities.

Eligible developers and users may obtain income tax exemptions, Net Wealth Tax exemptions, VAT refunds, and customs duty exemptions, and may also access enhanced benefits through COMAP-approved investment projects.

Software and ICT Sector - Talent Attraction Incentives

In addition to corporate-level incentives, Uruguay enacted Law No. 20,191, which grants a preferential tax regime to software and Information and Communication Technology (ICT) sector professionals.

The regime originally applied to employment contracts initiated up to February 28, 2025, and allows eligible individuals to opt, with respect to labour income, for Non-Resident Income Tax (IRNR) at a flat 12% rate (instead of the progressive Personal Income Tax - IRPF), and to opt out of the Uruguayan social security system. A bill submitted in September 2025 proposed extending the availability of this regime for an additional 12 months from the law’s promulgation date.

To qualify, the individual must: (i) be foreign or Uruguayan and not have been a tax resident in Uruguay during the five fiscal years prior to relocation; (ii) work full-time in Uruguay, with effective physical presence in the country for at least two-thirds of the days of each calendar year; (iii) perform activities under a dependent employment relationship; (iv) obtain all labour income from employment with companies engaged in software development or software-related services (including biotechnology or bioinformatics); and (v) expressly elect not to contribute to the local social security system.

These incentives support Uruguay’s position as a regional hub for software and technology services, a sector with a strong export orientation and sustained growth.

Uruguay generally applies a source-based tax system. As a general rule, income derived from activities performed or assets located outside Uruguayan territory is not subject to taxation, regardless of the nationality, domicile, or residence of the parties involved, or the place where agreements are executed.

Legal entities are considered tax residents when incorporated under Uruguayan law. The main direct taxes applicable to business activities are Corporate Income Tax (IRAE) and Net Wealth Tax (NWT), while the main indirect taxes are Value Added Tax (VAT) and Excise Tax (IMESI). There is no taxation on capital contributions or stamp duties.

Corporate Income Tax (IRAE):

IRAE is levied at a 25% rate on business income from Uruguayan sources obtained by resident entities and permanent establishments of non-residents. Duly documented expenses accrued to generate taxable income are generally deductible, subject to proportional limitations when the income is taxed at a lower rate in the hands of the counterparty.

Non-residents obtaining Uruguayan-source income, other than through a permanent establishment, are generally subject to Non-Residents’ Income Tax (IRNR), typically collected by withholding. Applicable rates depend on the type of income (commonly between 7% and 12%, and generally increased to 25% when the beneficiary is located in a low or no-tax jurisdiction). By way of example, dividends/profit distributions derived from IRAE-taxed income are generally subject to 7% withholding, while many cross-border payments for services, rentals, interest and royalties are generally subject to 12% withholding, subject to specific rules and potential treaty relief. Transfer pricing rules aligned with OECD guidelines apply to transactions with related foreign parties and with parties located in low or no-tax jurisdictions.

Certain small taxpayers may be eligible for simplified tax regimes (e.g., a fixed monthly tax), depending on turnover, activity and other statutory conditions.

Income derived from agricultural and forestry activities also falls within the scope of IRAE; however, depending on the nature and scale of the activity, certain taxpayers may elect to be taxed under the Agricultural Products Sales Tax (IMEBA). This option is not available to corporations, limited partnerships by shares, permanent establishments, trusts, closed investment funds, or state-owned enterprises. Certain individuals and unincorporated entities may also opt to be taxed under IRAE instead of personal income tax, subject to statutory conditions.

Individuals’ Income Tax (IRPF) and Non-Residents’ Income Tax (IRNR):

Resident individuals are subject to IRPF, which taxes labour income and capital income. Labour income is subject to progressive rates of up to 36%, while capital income is generally taxed at a 12% flat rate, subject to certain exemptions and reduced rates.

Non-residents are subject to IRNR on Uruguayan-source income at proportional rates that generally range between 7% and 12%, and are generally increased to 25% when the income is obtained by entities located in a low or no-tax jurisdiction. IRNR is typically collected by withholding.

Net Wealth Tax (NWT)

NWT applies annually at a 1.5% rate on the net value of assets located or economically used in Uruguay. Certain exemptions apply, including minimum non-taxable amounts and sector-specific exemptions for agricultural and farming investments. NWT is levied not only on corporate taxpayers but also on the net wealth of individuals, at progressive rates ranging from 0.1% to 0.4%, assessed at each year-end.

In addition, a portion of the IRAE paid during the same fiscal year may be credited against Net Wealth Tax, subject to statutory limits.

Value Added Tax (VAT)

VAT is levied at a standard 22% rate on the sale of goods and provision of services within Uruguay (i.e. basic food items, medicines, hotel services, health services) and on imports. A reduced 10% rate applies to certain essential goods and specific services, and some transactions are exempt or subjet to special rules. Exports are generally VAT exempt, with recovery of input VAT credits (refund), subject to formalities.

Other Taxes

Additional taxes include the Excise Tax (IMESI), levied on the first domestic sale by manufacturers or importers (exports are exempt) at product-specific rates that can be significant (particularly for alcohol, tobacco, and fuels) and the Real Estate Transfer Tax (ITP), which applies broadly to transfers of immovable property and is generally charged at 2% per party based on the property’s tax value, with higher rates applying to gratuitous transfers (4%) and certain exemptions for heirs and trust-related transfers who pay a 3% rate.

Uruguay’s competition regime is governed by Law No. 18,159 (Free Competition Defense Law) and its Regulatory Decree No. 404/007. The law applies to all natural and legal persons, domestic or foreign, whose activities are carried out in Uruguay or produce effects in Uruguay.

While competition rules do not generally restrict the incorporation of legal entities, they are relevant to foreign investors entering the market through acquisitions, mergers or other transactions involving a change of control. Certain economic concentrations are subject to mandatory prior authorization by the Competition Promotion and Defense Commission when statutory turnover thresholds are met. The regime includes a standstill obligation, prohibiting closing prior to clearance.

The law prohibits anticompetitive practices, including abuse of dominance and hard-core cartel conduct such as price fixing, market allocation and bid rigging.

Merger control has undergone important recent reforms (including Law No. 20,212, effective January 1, 2024, and subsequent implementing measures), which refined notification triggers, introduced a dual-threshold test and expanded the procedural toolkit (including a preliminary notification mechanism for certain transactions). Additional procedural adjustments were introduced through the National Budget Law 2025–2029 (Law No. 20,446), among others, affecting timelines and the assessment of remedies/commitments. As a practical matter, investors should assess early whether a transaction may require prior clearance.

Yes. Uruguay recognizes alternative dispute resolution mechanisms, in particular arbitration, under a dual regulatory framework:

International arbitration is governed by Law No. 19,636 (2018), which modernized Uruguay’s regime for international commercial arbitration and aligns it with widely accepted international standards (UNCITRAL Model Law-based approach).

Domestic arbitration is regulated in the General Code of Procedure (CGP), Title VIII (Arts. 472–506), as amended by Law No. 20,257, which modernized the former domestic arbitration provisions. Under this regime, any individual or collective dispute may be submitted to arbitration, unless the matter is legally non-arbitrable, and awards are recognized by operation of law, including those rendered by arbitrators appointed by the parties, by courts, or by arbitration chambers (CGP Art. 472.2). The arbitration agreement must be in writing, and the former requirement of a separate and formal “compromiso arbitral” has been eliminated (CGP Art. 473.3–473.4). As a default rule, awards are rendered as a matter of law (de derecho) unless the parties expressly authorize equity (CGP Art. 477).

Domestic awards are enforceable through judicial enforcement proceedings before the competent courts (CGP Arts. 494 and 498). Challenges to domestic awards are limited to a nullity action on specific grounds (CGP Art. 499).

Foreign arbitral awards may be recognized and enforced in Uruguay in accordance with applicable treaties, international arbitration legislation, and, where relevant, the rules applicable to enforcement of foreign judgments (CGP Art. 502).

Uruguay is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and the 1975 Inter-American (Panama) Convention on International Commercial Arbitration. In practice, recognition/enforcement of foreign awards is pursued through an exequatur-type judicial procedure applying the relevant treaty and domestic procedural rules; once recognized, the award may be enforced through ordinary enforcement proceedings.

For investor-State disputes, Uruguay is also a Contracting State to the ICSID Convention, and awards rendered under that framework are enforceable in accordance with the Convention’s mechanism.

Yes. Uruguay has a specific legal framework aimed at the promotion and protection of investments, mainly through the Investment Promotion Law (Law No. 16,906).

This regime provides automatic and project-based tax incentives, regardless of the investor’s nationality or legal vehicle. Automatic benefits apply to IRAE (Corporate Income Tax) and IMEBA (Agricultural Products Sales Tax) taxpayers engaged in productive activities and include Net Wealth Tax exemptions on bovine and ovine breeders and dairy cattle, as well as on certain productive assets such as industrial machinery and premises. In addition, VAT and IMESI exemptions apply to qualifying imports, together with VAT reimbursement on eligible local purchases.

Additionally, investment projects declared as “promoted projects” by the Executive Power, following evaluation by COMAP, may access significant incentives such as IRAE exemptions (generally 30%-100% of the investment), Net Wealth Tax exemptions on movable fixed assets and construction works, VAT reimbursements, and customs duty exemptions, subject to statutory limits and compliance obligations.

These benefits are independent of the investor’s legal form or source of funding, ensuring a neutral and predictable investment environment.

Uruguay’s investment climate is stable, open, and non-discriminatory toward foreign investors. The government recognizes foreign investment as a key driver of economic development, and the legal framework grants national treatment to both foreign and domestic investors. Most investments are permitted without prior authorization or screening. Investors may freely transfer capital and profits abroad and may choose between arbitration and the domestic judicial system for dispute resolution. As previously discussed in this guide, Uruguayan courts recognize and enforce foreign arbitral awards.

Democratic stability is a significant strength. Uruguay is characterized by a strong rule of law and long-standing institutional continuity. It is the only South American country classified as a “full democracy” in the 2024 Democracy Index published by The Economist. With a score of 8.67 out of 10, Uruguay ranks 15th globally among 167 countries, placing it among a small group of 25 full democracies worldwide. This standing reflects solid political institutions and high levels of civil liberties and electoral participation.

From a macroeconomic perspective, Uruguay maintains sound fundamentals. As of late 2025 and early 2026, Uruguay maintained investment-grade sovereign ratings with a stable outlook from the main credit rating agencies (S&P: BBB+; Moody’s: Baa1; Fitch: BBB). Annual CPI inflation closed 2025 at approximately 3.65% (12-month variation), within (and below the midpoint of) the Central Bank’s target range.

Uruguay also stands out regionally for its low perceived levels of corruption. In the Corruption Perceptions Index 2024 (published in February 2025), Uruguay ranked first in the Americas, with a score of 76 points and a global rank of 13 out of 180 countries.

Despite these strengths, foreign direct investment levels remain modest by international standards, notwithstanding periodic increases, including a recent boost linked in part to large-scale pulp mill projects. Nevertheless, investor feedback remains broadly positive. A 2024 survey by Uruguay’s investment promotion agency, Uruguay XXI, found that approximately 88 percent of foreign investors were satisfied or very satisfied with the country’s investment climate. Investors consistently highlight macroeconomic and political stability, institutional and legal certainty, and available tax incentives, while noting challenges related to the cost of doing business, administrative processes (including permits and public tenders), and limitations in human capital, particularly in specialized technical fields such as IT.

Uruguay has a comparatively strong legal framework on labour standards and human rights, although -as in any jurisdiction- investors should perform case-specific due diligence, particularly in regulated sectors and complex supply chains. In parallel, the government has adopted a long-term climate strategy aimed at achieving carbon neutrality by 2050 and is progressively integrating environmental criteria into public policies. In 2022, Uruguay was among the first sovereign issuers of sustainability-linked bonds (along with Chile), linking coupon step-ups/step-downs to performance against environmental indicators.

Overall, Uruguay offers a predictable, rules-based investment environment with strong legal protections, free movement of capital, and high institutional quality. While investors may face operational challenges related to scale, costs, and administrative complexity, the country’s political stability, transparency, and commitment to long-term sustainability continue to position Uruguay as a reliable and attractive jurisdiction for foreign investment.

Uruguay promotes investment in activities developed under the Investment Promotion Law, Free Zones, and Industrial and Scientific-Technological Parks.

These regimes are commonly used for:

• Manufacturing and industrial activities

• Export-oriented services (including technology and knowledge-based services)

• Logistics, warehousing, and distribution

• Research, innovation, and scientific-technological projects

Investment projects approved under these regimes may benefit from significant tax exemptions, making them particularly attractive for foreign investors.

Uruguay’s infrastructure is well developed and is undergoing continued modernization, with significant public and private investment in key sectors such as ports, energy, water and sanitation, transportation, and urban development. The country has prioritized infrastructure as a pillar of long-term economic growth, sustainability, and competitiveness, supported by a transparent regulatory framework and access to financing from multilateral development banks.

Port infrastructure, particularly in Montevideo, is being expanded and modernized through long-term concessions and private investment, strengthening Uruguay’s role as a regional logistics hub.

The energy sector is supported by ongoing investments in renewable energy projects, including solar and hydrogen, as well as modernization works in existing hydroelectric facilities.

Major investments in water treatment and sanitation aim to improve system resilience and address vulnerabilities exposed by droughts. The railway sector is also being revitalized, enhancing connectivity between the port and the interior, although network coverage remains limited in some areas.

Overall, Uruguay’s infrastructure framework generally supports foreign investment by reducing operational and logistics risks, enabling regional distribution strategies, and offering opportunities through public-private partnerships and concession schemes. While certain sectors still require further upgrades and institutional continuity to reach full efficiency, the ongoing investment agenda and predictable policy environment contribute positively to Uruguay’s attractiveness for foreign investors, particularly in infrastructure-intensive and export-oriented activities.

Uruguay is generally considered a low-risk destination for foreign investment, particularly when compared to other Latin American countries. The main risks investors may face are primarily economic and operational rather than political or institutional.

From a macroeconomic perspective, risks include relatively high public debt levels, persistent dollarization of the economy, and exposure to external shocks, given Uruguay’s reliance on agricultural exports and regional demand, especially from Brazil and Argentina. Exchange-rate fluctuations can affect pricing, consumption, and financing conditions, although these risks are mitigated by strong international reserves, moderate external debt, disciplined fiscal management, and a credible monetary policy framework. Inflation expectations are anchored within the Central Bank’s target range, and sovereign risk remains low.

Operational risks include the country’s small domestic market, high operating costs, and structural constraints such as labour rigidities and limited availability of specialized human capital. Environmental risks, especially water stress and climate-related events such as droughts, have also gained relevance following recent disruptions, underscoring the importance of infrastructure investment and resource management.

These risks are largely mitigated by Uruguay’s high level of institutional predictability, strong rule of law, low corruption, access to multilateral financing, diversified trade relationships, and proactive public policies aimed at fiscal sustainability, climate resilience, and long-term stability. As a result, Uruguay continues to be viewed as one of the most resilient and reliable investment environments in the region.