If you would have asked me two years ago if I thought starting a small business in Uruguay made sense, I would have said no. Until recently the attraction to Uruguay for English speaking expats has primarily been the country’s quality of life and real estate investment opportunities, not employment or direct business activities.
But a lot has changed in the world over the last few years. The region is experiencing solid economic growth, large amounts of capital are being invested, and people with ambition and talent are taking notice. Today, I would say starting a business in Uruguay would be a challenging, but potentially very rewarding endeavor.
Reasons to consider starting a business in Uruguay
Uruguay has a growing economy
- Uruguay’s economy has been growing at an average annual rate of 6% for the last six-and-a-half years. (There was no recession in Uruguay during the 2008 and 2009 financial crisis.)
- South America, as a region, is anticipating 10 years of economic growth based on demographics and current economic trajectories.
- At this time (December 2010), Uruguay has the highest percentage increase of Foreign Direct Investment of any country in Latin America.
- Uruguay’s exports are rapidly expanding in value and are on their way to hitting an all time record.
- Uruguay is rated as having the highest level of political and social stability in Latin America.
- Uruguay and Chile are tied for having the most government transparency in Latin America.
- More so than any other country in the region, the rules governing business are serious and predictable, and the court system is objective and fair.
- Uruguay has the most reliable electrical system in Latin America.
- Uruguay is said to have the best road system in Latin America.
- The country has a completely digital telecommunications network.
- The Port of Montevideo is the most modern in the region.
- The Legatum Institute, which rates countries level of prosperity based on a combination of economic and quality of life factors, ranks Uruguay as having the highest level of prosperity in Latin America.
- Mercer Human Resource Consulting rates Montevideo as the major South American city with the highest quality of living in South America.
- Uruguay’s Punta del Este is South America’s most popular beach resort.
- Uruguay is the seat of Mercosur, a common market set up to promote free trade and facilitate the free exchange of goods, people, and money between Brazil, Argentina, Paraguay, and Uruguay. While Uruguay, itself, has a small population, it is a good strategic location for setting up a regional base.
- The original four Mercosur countries have an annual GDP equal to 2 trillion US dollars.
- Uruguay’s executive branch extends a variety of tax exemptions to specific industries to encourage targeted foreign direct investment. The purpose of these incentives is to encourage the production of good paying local jobs. Uruguay ranks in the top 20 countries for creating the most domestic jobs for each dollar of foreign direct investment.
- Uruguay has a number of free trade zones located throughout the country including a free trade port.
Offering a personal service in Uruguayan
Some English speaking immigrants make a living in Uruguay by providing a personal service. As an example, I know one who is a Montevideo attorney. I know another who is a Montevideo tour guide, and others who are property managers.
Food and retail businesses
Some English speakers coming to Uruguay have joined the local economy by operating a restaurant or retail shop.
Construction and remodeling
Some English speaking immigrants to Uruguay have found a business niche in residential construction and refurbishing. (Building and refurbishing can be a complementary way to add value to your own real estate investments.)
One English speaking immigrant to Uruguay has launched a regional residential development company, which has introduced thermal concrete construction blocks to build more energy efficient and affordable housing for workers.
Uruguay has many established agricultural industries. There are business opportunities in agricultural production, agriculture support businesses, processing agricultural goods, storage, and shipping. A couple of crops that seem to be of particular interest to newcomers are wine grapes and olives.
Several expats and international companies have started IT businesses in Uruguay, or have formed partnerships with Uruguayan IT companies. It is my understanding that the Uruguay executive branch is providing an income tax exemption for most types of IT companies, making Uruguay a great place for a startup.
Tips for starting a business in Uruguay
- Do not make assumptions about the market or any aspect of business operations in Uruguay based on your experience from another country and culture. Starting a business anywhere can be a challenging undertaking. Starting a business in a new country can be especially challenging because the market, government requirements, labor attitudes, and the way business is conducted will be different.
- If you will be using hired labor or working with the Uruguayan public, wait to become culturally acclimated or hire a trustworthy partner who is bi-cultural before forming a business plan.
- If you don’t speak Spanish, now is a good time to start learning.
- Do research to determine if there is a genuine and sufficient demand for the product or service you are considering offering in Uruguay.
- Prepare a complete business plan considering every aspect of your business operation to determine if your business idea is profitable in Uruguay.
- Start small and let your business acclimate before expanding it.
Note: It is possible to achieve business success by taking a good idea from another place and bringing it to Uruguay if - a) you also have an intimate understanding of how business is done in Uruguay, and - b) the business idea is customized to fit the realities of Uruguay.
Useful websites for starting a business in Uruguay
Uruguay XXI is Uruguay’s investment and export promotion agency, which provides free support to foreign investors considering starting a business in Uruguay. It provides custom economic reports and provides information about the tax and legal aspects of doing business in Uruguay. It also has the ability to arrange meetings with government authorities, industrial players, sources of capital, and potential partners.
The agency's website has information about Uruguay business structures, import and export procedures, trade agreements, Uruguay’s tax regime, and various incentives offered to locate a business in Uruguay.
You can also download a free 104 page PDF Uruguay “Business Guide” from the Uruguay XXI home page. The agency’s report is loaded with helpful information for anyone considering investing or starting a business in Uruguay. Available for download at: http://www.uruguayxxi.gub.uy/innovaportal/v/106/3/innova.front/home
Uruguay XXI also has a free 11 page PDF guide titled, “Useful information for export promotion and foreign investment attraction in Uruguay” available for download at: http://www.uruguayxxi.gub.uy/innovaportal/v/321/2/innova.front/benefits
This link goes to a page on the Uruguay XXI website with Industry Specific tax benefits
Free Trade Zones in Uruguay
This website, produced by Uruguay’s Ministry of Economy and Finance, provides information about Uruguay’s free trade zones, including specific tax benefits, procedures, and free zone locations in Uruguay.
The Free Trade Zone website has a free PDF report with the types of businesses located in various free trade zones in Uruguay. (The report is not up-to-date, but is helpful for general reference.) Available for download at: http://www.zfrancas.gub.uy/english/statistics/PreliminaryReport2ndCensus.pdf
Free downloadable PDF reports useful for Starting a business in Uruguay
Doing Business in Uruguay – 48 page PDF
Prepared by PricewaterhouseCoopers
This report includes sections about Uruguay's respect for judicial security, high standard of human capital, frame for investments, tax regime, investment incentives, accounting and auditing regulations. Available for download at: http://uruguay.polpred.com/upload/pdf/pwc-doingbusiness-uy.pdf?PHPSESSID=a1eal5gl37htr8h1i46l718qn7
Doing Business in Uruguay – 54 page PDF
Prepared by PKF Accountants and Business Advisors
Includes a country overview, business structures, accounting and auditing, protection of intellectual and industrial property, social security regulations, as well as hints for the business investor. Available for download at:
Doing Business in Uruguay, A Country Commercial Guide for US Companies – 56 page PDF
Prepared by the US Commercial Service
This publication includes chapters on selling US products and services in Uruguay, provides information about leading sectors for US exports, trade regulations and standards, trade and project financing. Available for download at: http://montevideo.usembassy.gov/usaweb/paginas/Pdf/FY06_Country_Commercial_Guide.pdf
Doing Business in Uruguay Guide - 20 page PDF
Prepared by UHY Cr. Hugo Gubba & Asociados, Public Accountants, Auditors, tax assessors
This short guide touches upon the main points of foreign investment, setting up a business, labor, taxation, and accounting. Available for download at:
Doing Business in Uruguay - 34 page PDF
Prepared by Baker Tilley International
Includes chapters on business entities, trusts, taxation, financing and investment, employment regulations and social security, and taxes. Available for download at: http://www.bakertillyinternational.com/media/36906/doing_business_in_uruguay-30apr09.pdf
Doing Business 2011 Uruguay, Making a difference for Entrepreneurs – 78 page PDF
A co-publication of the World Bank and the International Finance Corporation
This publication provides a comparative ranking of Uruguay’s ease of doing business in regard to government regulation. Uruguay’s government, while fair, has a lot of red tape. The good news is the trend is toward government requirements becoming easier and not more cumbersome.
The sections of this publication include the overall ease of doing business in Uruguay, starting a business in Uruguay, dealing with construction permits, registering property, getting credit, trading across borders, enforcing contracts, and closing a business. Available for download at: