Since 1991 Uruguay has been part of the Southern Common Market (MERCOSUR), together with Argentina, Brazil and Paraguay. Venezuela became a full member in 2012. The regional opening process has concluded with the execution of international agreements regarding goods, services, public acquisitions, investments and double taxation.

In addition to Uruguay's privileged geographical location and very attractive investment schemes, it has entered into thirteen trade agreements which include preference in goods, and three service agreements, which turns it into an excellent point of entry for major economic markets.

The recognized political and social stability of the country, added to the macroeconomic soundness and reliability of its legal system represent a guarantee for those who decide to invest in the country. Nearly thirty investment promotion and protection agreements and thirteen agreements to avoid double taxation ratify this decision.

Agreements with preferences on goods

Uruguay, together with Brazil, Argentina, Paraguay and Venezuela is part of the Southern Common Market (MERCOSUR). Uruguay has signed, as part of the Mercosur or independently, a series of trade agreements that allow access to other markets with preferential tariffs beyond Mercosur.

MERCOSUR has signed trade agreements with many countries in Latin America: Chile (1996), Bolivia (1996), Colombia, Ecuador and Venezuela (2004), Peru (2005) and Cuba (2006). An agreement that exclusively covers the automotive sector was signed with Mexico (2002). Outside the region, the Mercosur has signed agreements with Israel (2007), India (2004), SACU (2008), Egypt (2010) and Palestine (2011). Mercosur is also part of the Global System of Trade Preferences among developing countries (GSTP), in force in Uruguay since 2005. SACU, Egypt and Palestine agreements have not yet come into force.

Uruguay has also entered into a bilateral Trade Agreement with Mexico (2003), which enables the free movement of goods and services between both countries.

Services agreements

Service agreements intend to grant guarantees to the parties on the respect for some basic principles, such as national treatment and the most favored nation, which ensure the entry to markets with no discrimination. These agreements entail commitments of the countries with respect to the different service trade sectors and four supply forms: cross-border supply, consumption abroad, commercial presence and presence of natural persons.

The significance given by Uruguay to service trade has resulted in the subscription of agreements involving commitments to this respect. To date, three service agreements have been entered into with MERCOSUR, Chile and Mexico.

Public procurement agreements

Most countries have specific rules in place which regulate the market of procurements by the State or State companies, including restrictions or discriminations favorable to nationals within these rules. Public procurement agreements intend to guarantee some basic principles related to national treatment and transparency in procedures, among other things.

Even though Uruguay has an open market in terms of government procurement, in which foreign investors and bidders may submit their proposals, currently there is an agreement in place with Chile and others are under negotiation.

Investment promotion and protection agreements

Presently, Uruguay has thirty agreements in force regarding Investment Promotion and Protection. Three of these agreements (Chile, Mexico and United States) include pre-establishment. Agreements signed with Germany, the Netherlands, Switzerland, Hungary, Italy, Romania, Poland, United Kingdom, Belgium, Spain, France, China, Malaysia, Canada, Bolivia, Czech Republic, Venezuela, Sweden, Portugal, Panama, Israel, El Salvador, Australia, Finland, Armenia, Vietnam, Korea are post-establishment agreements.

The main principles sought by investors in these type of agreements are mirrored in the agreements currently in force. The scope of the agreements signed by Uruguay is extensive, providing the greatest possible guarantees to those who decide to invest in the country. All agreements signed by Uruguay guarantee foreign investors certain principles such as the clause of the most favored nation, provisions of fair and equal treatment, expropriation related clauses and no restrictions on transfers clauses. Likewise, all agreements signed by Uruguay on investments contain provisions related to the settlement of disputes between an investor and the State where the investment is made and between States, including the possibility of resorting to an international court by an investor who has a claim against the State.

Agreements to avoid double taxation

Different tax criteria may cause companies or individuals to be subject to taxes for the same source of earned income in more than one country when operating at international level. International agreements seek, among other things, to avoid double taxation limiting the taxing powers of each country.

Uruguay has signed agreements with Spain, Sweden, Portugal, Mexico, Malta, Liechtenstein, India, Korea, Finland, Ecuador, Germany, Hungary and Argentina. Said agreements include provisions which eliminate double taxation between the parties regarding income and wealth taxes and ensure non-discrimination in taxation.

These agreements offer stability and predictability in tax matters, establishing mechanisms to avoid double taxation and indicating which of the Contracting States has tax jurisdiction over the main income and wealth-related taxes. This is achieved by the waiver of jurisdiction of one of the States or by imposing maximum rates in the event double taxation is admitted and generating mechanisms to deduct or exempt taxes paid in another territory.

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