Why Uruguay is quietly becoming a regional powerhouse for international services
Jorge Borrás Minetti
by Jorge Borrás Minetti
Uruguay may not be the first country that comes to mind when thinking about regional business hubs in South America, but perhaps it should be. Small in size and population – just 3.5 million people, half of whom live in Montevideo – Uruguay is steadily building a reputation as a stable, efficient, and business-friendly platform for international services and investment.
Strategically located between Brazil and Argentina, Uruguay has turned its geography into a clear advantage. Its capital, Montevideo, hosts a modern deep-water port, a well-developed highway network connecting to neighbouring countries, and an airport that ranks among the top free-trade ports/airports in the world. These assets, paired with strong legal frameworks and a reliable regulatory environment, make the country an increasingly popular choice for companies looking to serve the wider Latin American market.
Uruguay’s regional relevance is also strengthened by its membership in MERCOSUR, the Southern Common Market, which includes Argentina, Brazil, and Paraguay. While Brazil and Argentina dominate the bloc in terms of population and economic weight, their frequent political and regulatory shifts often introduce risk. In contrast, Uruguay and Paraguay offer more stable environments, both economically and legally. This has made the so-called “smaller” members of MERCOSUR surprisingly effective gateways for international investment.
This advantageous regional role is especially evident in the services sector. Uruguay has a long track record in professional services, while Paraguay has shown impressive recent growth. Together, they now account for a significant portion of service-related investment coming into the region. Thanks to policies that allow the free movement of capital, equal treatment for residents and non-residents, and transactions in multiple currencies, companies find it easy to operate across borders.
Uruguay, in particular, has built a legal and tax environment designed to attract long-term investment. Two elements stand out: the Investment Promotion Regime (Law No. 16,906) and the Free Trade Zones.
The Investment Promotion Regime offers a range of incentives for projects that align with national development goals – these can include tax exemptions, credits, or reduced corporate income tax rates, depending on the project’s scope and location.
Meanwhile, Uruguay’s free trade zones present even more favourable conditions, including exemptions from income tax, property tax, import/export duties, and additional flexibilities in labour and customs. While these zones were initially created to support logistics and goods-based activities, in recent years they have increasingly become platforms for international service delivery – from tech and finance to consulting and trading.
Perhaps most notable is Uruguay’s general tax principle, which focuses only on income generated within the country. This means that a company based in Uruguay providing services abroad often pays no tax (or a very low rate) on that foreign income. As a result, service providers can operate from Uruguay, serve global clients, and benefit from a competitive tax framework even outside of the designated free trade zones.
This combination of predictability, efficiency, and legal clarity has made Uruguay attractive for both businesses and individuals looking to relocate. Cities like Montevideo and Punta del Este, known for their quality of life, have become popular among professionals in the tech and digital sectors. A similar trend is visible in Paraguay’s capital, Asunción.
In a region often marked by economic swings and policy changes, Uruguay’s quiet consistency has become a strength. For companies and investors seeking long-term opportunities in South America, especially in services, Uruguay offers a compelling base – small in size, but big on stability.
Jorge Borrás is a certified public accountant and holds a master's degree in tax law and techniques from the University of Montevideo. He is a professor at the Catholic University of Uruguay in the subject of tax techniques. He is a member of the Association of Accountants, Economists, and Administrators of Uruguay, and a member of the Uruguayan Institute of Tax Studies. Contact Jorge.
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Vertex Professional Services is a company providing legal, tax, and auditing services in Uruguay. Vertex is made up of partners with extensive experience and professional backgrounds. In order to expand and enhance its services, Vertex has leading associates in the region.
